India Cements Q4FY26 beat: why MOFSL stays Sell

Shares jump on results-led rerating

India Cements shares surged over 13% on the NSE after the Chennai-based cement maker posted better-than-expected results for the March 2026 quarter (Q4FY26). The stock touched an intraday high of ₹462. Around 10:30 AM, it was trading at ₹461.40, up 13.15% from the previous close of ₹407.70. In the same window, the NSE Nifty50 was at 24,044.15, up 146 points or 0.61%. The move added to a broader recovery in the counter, which has risen about 66% from its 52-week low of ₹278.3 hit on April 28, 2025.

Q4FY26: Profit jumps as expenses fall

For Q4FY26, India Cements reported net profit of ₹59.5 crore, more than three times the ₹14.67 crore posted in the year-ago quarter. Revenue from operations rose 2.6% year-on-year to ₹1,228.65 crore from ₹1,197.57 crore. The bigger swing came from costs, with total expenses declining 10.5% year-on-year to ₹1,174.79 crore. The combination of modest revenue growth and lower expenses helped drive the quarterly profit improvement. The numbers were also supported by stronger operating metrics, including higher volumes and better utilisation.

Volumes and utilisation show a sharper improvement

Operationally, the company reported domestic sales volume of 3.12 million tonnes in the quarter, up 18% year-on-year. Net realisations increased 3.5% sequentially and 6.2% year-on-year, pointing to firmer pricing or mix. Capacity utilisation improved 11% year-on-year to 84%. A key highlight was operating profitability per unit: EBITDA per tonne was ₹497 versus ₹305 per tonne in Q3FY26. Together, these indicators helped explain why the market reacted positively even though revenue growth was relatively limited.

Full-year FY26 still ends in a loss

Despite the Q4 turnaround, India Cements reported a net loss of ₹67.25 crore for FY26. This compared with a net loss of ₹143.69 crore in the prior year, indicating a narrower loss but not a return to full-year profitability. The FY26 number matters because it frames the Q4 performance as a sharp quarterly improvement within a year that remained challenging at the bottom line.

Motilal Oswal sees operational lift under UltraTech leadership

Motilal Oswal Financial Services (MOFSL) said India Cements is seeing better operations under UltraTech Cement’s leadership. It pointed to strong volume growth, improved margins driven by cost efficiencies and higher realisations, and a strengthening balance sheet. On the growth outlook, MOFSL expects revenue to grow at an 11% CAGR over FY26 to FY28. This is expected to be led by around 9% volume growth and a 2% improvement in realisations. The brokerage also expects EBITDA to rise at about a 50% CAGR, albeit off a low base.

EBITDA per tonne trajectory and what it implies

MOFSL’s estimates include EBITDA per tonne of ₹509 in FY27E and ₹730 in FY28E, compared with ₹385 in FY26. The step-up suggests the brokerage expects efficiency gains and pricing to translate into stronger per-tonne profitability beyond the Q4 improvement. Still, the estimates also highlight why the base matters: when profitability is recovering from a weaker starting point, CAGR numbers can look very high without necessarily implying a linear improvement each year.

Capex and net debt: the key risk cited

MOFSL flagged leverage as a constraint in its thesis. It expects net debt to increase to ₹2,010 crore in FY27 and ₹1,910 crore in FY28 due to higher capital expenditure. It also estimates cumulative capex of around ₹2,000 crore compared with operating cash flow of ₹1,650 crore over FY27 to FY28. The mismatch between planned spending and expected cash generation is central to the brokerage’s caution, especially in a business where profitability can be sensitive to demand, pricing, and input costs.

Why the brokerage kept a Sell despite the beat

According to MOFSL, the current valuation of about 16x FY28E EV/EBITDA already prices in much of the expected operational improvement, which it said limits further upside. The brokerage valued the stock at 14x FY28E EV/EBITDA and maintained a ‘Sell’ rating with a target price of ₹350. In other words, while it acknowledged operational progress, its call hinges on the view that the market price is ahead of what its valuation framework supports.

UltraTech Cement call in the same note set

In a separate call referenced alongside the India Cements note, MOFSL maintained a ‘Buy’ on UltraTech Cement with a target price of ₹15,000 per share, valuing it at 19x FY28E EV/EBITDA. The note cited capacity ramp-up, cost efficiencies, and demand recovery in infrastructure and housing as drivers. Elsewhere in the provided material, MOFSL Research also referenced a ‘BUY’ with a target price of ₹15,200 versus a stated current price of ₹12,572, implying 21% upside, and noted South India capacity share rising to 27% from 16% in FY23.

Key numbers at a glance

Market impact and what investors are watching

The immediate market impact was a sharp price jump driven by the Q4 profit surprise and improved unit economics. Investors also appeared to respond to operational metrics such as higher volumes, improved utilisation, and the sequential rise in EBITDA per tonne. At the same time, the brokerage commentary shows that the debate has shifted from “is the turnaround real” to “how much of the turnaround is already priced in.” For India Cements, MOFSL’s Sell call highlights that capex and net debt trajectory can matter as much as quarterly performance when valuations are elevated.

Conclusion

India Cements’ Q4FY26 results showed a meaningful improvement in profitability and operating performance, helping the stock rally strongly on the day. But MOFSL maintained a Sell with a ₹350 target price, arguing that the current valuation already factors in operational gains and that capex could push net debt higher. The next set of updates investors are likely to track are the company’s progress on volumes, realisations, and whether cost efficiencies sustain the jump in EBITDA per tonne.

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard.