Cement prices in India are likely to increase by Rs 10-15 per bag from mid-October, an Emkay Research report suggests. The hike aims to offset rising input costs, even as the sector sees steady demand driven by non-trade and infrastructure.
Cement manufacturers in India are likely to hike prices by Rs 10 to 15 per bag starting mid-October to counter persistent input cost pressures, even as volume offtake registers steady growth, according to a research report released by Emkay Research.
“Given the onset of a busy season, favorable demand supply scenario, and basis our channel checks, there is a high probability of a Rs10- 15/bag price hike from 12-Oct,” the report stated.
Delayed plant expansion programs across the sector also caused clinker utilization rates to rise toward 79 per cent by the financial year 2028, balancing market fundamentals.
The report mentioned that companies executed rate adjustments of Rs 10 to 15 per bag earlier in the first quarter, yet these adjustments fell short of compensating for higher power and fuel expenses. A monsoon-driven softening in prices during July and August further widened the deficit.
“Rising fuel costs have been a pain point for the sector since 6-7M, with brief relief in Jul26,” the report highlighted.
Steady Demand Supports Sector
The brokerage firm noted that steady volume offtake supports the sector, with non-trade demand driving healthy consumption across regional markets.
“Industry volume offtake has been steady and is likely to see 7-8% yoy growth in 1HFY27, primarily driven by the non-trade segment,” the report said.
It projected demand momentum to persist over the next year and a half, supported by key seasonal and pre-election infrastructure activities.
“Further, we expect demand intensity to be robust for coming 18M, viz 6M of busy construction season (2HFY27), followed by 12M (FY28) of high demand owing to the general elections in 1HCY29,” the report noted, adding that overall demand compound annual growth rate remains pegged at around 7 per cent over the financial years 2026 to 2028.
Elevated Costs Weigh on Profitability
Despite steady dispatches, elevated operational expenditure continues to weigh heavily on sector profitability across operating units.
“Elevated input costs (Rs300-400/t) have been the industry’s pain-point for the past 6-7M – full impact of this is likely to be seen in 2Q earnings, with high probability of staying sticky in 2HFY27 too,” the report said.
Spot quotations for petcoke and imported coal stand approximately 20 per cent and 16 per cent above their second-quarter averages at USD 175 per tonne and USD 150 per tonne, respectively.
Packing expenses also climbed as polypropylene granule rates rebounded above Rs 135 per kilogram.
“To offset the cost inflation (Rs300-400/t), the industry will need another ~Rs10/bag (~3%) of sustained price hikes; hence, Oct price-hikes are crucial,” the report emphasized.
Second-quarter earnings face an estimated sequential decline of Rs 200 to 250 per tonne due to elevated fuel bills and negative operating leverage. (ANI)
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