Cement margins under pressure
Rating agency Crisil warns that rising energy costs are squeezing profitability across India’s cement industry this financial year. (The New Indian Express reports Crisil said higher fuel and energy expenses are eating into margins for cement producers.) (newindianexpress.com)
India’s cement makers are heading into fiscal 2027 with thinner profits as fuel and power costs climb faster than selling prices. (newindianexpress.com) Crisil Intelligence said operating margins for cement companies will shrink by 150 to 200 basis points year on year to 16 to 18 per cent, after expanding 260 to 280 basis points last year. Power and fuel, which make up 26 to 28 per cent of production costs, are projected to rise 10 to 12 per cent. (newindianexpress.com) The agency said Brent crude is likely to average $82 to $87 a barrel this fiscal, while industrial diesel prices rose about 25 per cent in March. It expects total production costs to increase 4 to 6 per cent. (newindianexpress.com) Cement is an energy-heavy business because kilns run at very high heat and plants also pay to move bulky raw materials and finished bags. That leaves producers exposed when imported pet coke, thermal coal and diesel all rise at once. (argusmedia.com) The pressure is arriving just as demand is improving. Crisil expects cement demand to grow 6.5 to 7.5 per cent in fiscal 2026, up from 4.5 to 5.5 per cent in fiscal 2025, helped by infrastructure spending, rural housing and stronger state budgets. (thehindubusinessline.com) Twelve states that account for about 65 per cent of India’s cement demand increased budget allocations by 11 per cent for the current fiscal, Crisil said in April 2025. The Union government also raised spending on core infrastructure ministries by 10 per cent, according to the same outlook. (thehindubusinessline.com) Companies are trying to recover some of the cost hit through price increases, but Crisil expects only a 1 to 3 per cent rise this year, taking average realizations to about ₹355 to ₹360 a bag. It said competition and continuing capacity additions will limit how far producers can push prices. (newindianexpress.com) Market analysts are seeing the same squeeze in quarterly results. Business Standard reported on April 13 that top cement companies may post about 9 per cent volume growth in the March quarter, but profit after tax could still fall about 1 per cent because fuel and packaging costs rose. (business-standard.com) Fuel buyers have already started rewriting procurement plans. Argus reported in March that imported pet coke delivered to India averaged $124.65 a tonne year to date in 2026, up from $111.62 a tonne in 2025, and west coast offers had reached $155 to $160 a tonne. (argusmedia.com) Some producers are shifting toward domestic coal to soften the blow, but Crisil said the first half of the fiscal year will remain cost-heavy as West Asia tensions keep energy markets volatile. For now, stronger cement demand is supporting volumes, not restoring margins. (argusmedia.com)
