The operating profitability of Indian cement companies is expected to decline by 10 -15% in FY27 due to elevated power, fuel, and selling costs triggered by ongoing geopolitical tensions in West Asia, rating agency ICRA said in a report.
ICRA said that, based on its profitability-per-ton sample set estimates, the operating profit of cement companies is projected to decline to Rs 820-870 per MT in 2026-27, compared with estimates of Rs 950-980 per MT in 2025-26.
According to the report, power, fuel, and selling costs account for 50-55 percent of total operating costs for cement companies.
Cement sector: Cost increase likely
India’s cement sector is highly dependent on coal/petcoke for clinkerisation and operating captive thermal power plants. From a distribution perspective, cement companies primarily rely on road networks to transport cement to end customers and move raw materials to manufacturing facilities.
ICRA stated that in 2026-27, power and fuel costs are set to rise, driven by higher petcoke prices, tighter fuel markets, and a likely increase in coal prices.
“Power and fuel costs are likely to increase by 10-12%, while selling costs could rise by 6-8% in 2026-27, owing to higher freight and packaging expenses”, Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA, said in a statement.
Cement sector: Price hike to aid
ICRA stated that a part of the impact is likely to be mitigated by an increase in cement prices, as selling costs rise by 6-8 percent, compared with a 10-12 percent rise in power and fuel costs due to crude-linked cost pressure.
Major players in the cement Industry have initiated price hikes of Rs 10-12 per bag in April 2026, although the extent of cost pass-through remains contingent on demand-supply dynamics.
“Pricing flexibility of the cement players continues to remain constrained due to intense competition. Cement prices are expected to increase by 3-5% in FY2027, following a marginal recovery of ~2% in FY2026,” Reddy said.