Operating profitability for Indian cement companies is expected to decline in 2026-27 due to increased power and fuel prices, along with rising selling costs linked to geopolitical tensions in West Asia. A report by ICRA projects a 10–15% decrease in OPBIDTA per tonne for cement companies, from Rs 950–980 per metric tonne in 2025-26 to Rs 820–870 per metric tonne in 2026-27. Cement prices are anticipated to rise by 3-5% in FY2027, following a slight recovery of about 2% in FY26.
Industry players have implemented price increases of Rs 10-12 per bag in April 2026, but the extent of cost pass-through will depend on demand-supply dynamics. Despite cost pressures, the credit profile of the sector remains stable, and debt protection metrics are expected to stay favorable. Power, fuel, and selling costs make up 50-55% of the total operating costs for cement companies.
The ongoing conflict in West Asia has led to a surge in global crude oil prices, impacting costs of essential inputs like petcoke, diesel, and polypropylene for cement firms, which could affect their operating profitability. Anupama Reddy, Vice President and co-group head of corporate ratings at ICRA, highlighted that power and fuel costs are likely to increase in 2026-27 due to rising petcoke prices, tightening fuel markets, and a potential rise in coal prices. Moreover, higher logistics costs and a depreciating rupee are expected to raise the landed cost of fuel.
In the upcoming year, power and fuel costs are forecasted to rise by 10-12%, while selling costs could increase by 6-8% in 2026-27, driven by higher freight and packaging expenses. Despite these challenges, cement companies are projected to partially offset the impact through price adjustments, thereby safeguarding overall profitability. ICRA estimates crude oil to average $95 per barrel in 2026-27, up from around $72 per barrel in 2025-26.
