30 - 09 - 2026

Cement industry margins are likely to drop to lowest since 2025

Cement industry margins are likely to drop to their lowest levels since the start of calendar year 2025 as elevated fuel prices and negative operating leverage may weigh on their profitability.

With pet coke prices rising sharply by 19 per cent in past one month and limited cushion from lower-priced domestic coal, the variable costs would remain inflationary in the third quarter of this fiscal. The near-terms margins would be also under pressure, according to a report by Elara Capital.

“Accordingly, we see downside risk to earnings estimates and expect earnings revisions to remain negatively biased,” it added.

Channel checks indicate that the industry plans to take price hikes of ₹5-15 per bag in the first week of October ahead of the festival season. However, the upcoming festival period could limit the pace of demand recovery in the coming weeks. 

Cement prices remained broadly stable in the second quarter of FY27, on a quarter-on-quarter basis (QoQ), as patchy monsoon activity caused limited disruption to construction activity.

Partial price hikes

Across the country, cement prices rose by ₹7 per bag on a month-on-month basis to ₹359, reaching a multi-quarter high, led by hikes of ₹5-15/bag across most regions. South India saw the sharpest increase at ₹11 per bag, followed by North at ₹10 per bag, Central and East at ₹5 per bag each, and West at ₹4 ₹ per bag.

Demand remained mixed as monsoon activity tapered from mid-August through September, barring a few pockets that continued to receive rainfall. Regional demand faced challenges from excess rainfall in some areas, sand shortages and a slowdown in government-led activity post elections. While some pockets witnessed an improvement at the start of the month, consumption was disrupted towards the end by Ganesh Chaturthi.

Prices stable QoQ

Breaking the usual seasonal trend, cement prices rose by 4 per cent on a year-on-year (YoY), but remained stable for QoQ, reversing the usual seasonal drop seen in the second quarters. Despite intermittent heavy monsoon in the quarter, largely dry conditions and abnormal cost inflations supported price stability. Central, North, South and West remained broadly stable QoQ, while East saw a 1 per cent QoQ decline.

Prices across North, Central and East India remained flat to positive in September. In Uttar Pradesh, prices increased by ₹0-10 ₹ per bag, while Madhya Pradesh saw a ₹5-10 ₹ per bag hike. In East India, West Bengal led with a ₹15 ₹ per bag increase, followed by ₹10 ₹ per bag in Chhattisgarh, while Bihar, Jharkhand and Odisha remained stable for the third consecutive month. In North India, Rajasthan and Punjab saw an increase of ₹10 per bag each, followed by Delhi at ₹5 per bag.

Cement prices in South India had remained largely unchanged for three consecutive months through June 2026. However, this trend reversed in September, with prices rising by ₹11 per bag on average across the region by the end of the quarter. Demand witnessed a modest MoM improvement as monsoon activity remained largely subdued during the month. Andhra Pradesh saw the sharpest price increase of ₹15 per bag in September, while Karnataka, Tamil Nadu, Kerala and Telangana recorded ₹10 per bag hikes each.   

Despite limited monsoon activity in September, demand was sluggish, with Ganesh Chaturthi disrupting consumption across Western markets. Market intermediaries expect demand to remain soft with Navratri approaching. Companies are targeting a ₹5-10 per bag price hike ahead of the festival season. Prices in Maharashtra increased by ₹5-10 per bag on MoM basis in September, while Gujarat remained flat.

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