Cement price hikes in April ease margin fears—at least for now

Regionally, prices rose by an average ₹40 per bag month-on-month in the southern market and by ₹20 in the east. In the north, west, and central regions, the increase ranged from ₹8 to ₹15 per bag.

If these price hikes sustain, they could significantly lift profitability across the sector. After all, this comes at a time when costs of key inputs such as imported petroleum coke and coal have edged higher, stoking concerns about margin pressure. While access to low-cost fuel may have helped companies sail through the March quarter (Q4FY25), the burden of elevated input costs is expected to weigh on the June quarter (Q1FY26).

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In that context, price hikes during the seasonally strong construction period could help cement makers offset cost pressures and defend margins. In fact, Motilal Oswal estimates that cement spreads—defined as the difference between average cement prices and energy costs on a per-tonne basis—are likely at a 17-month high in April, largely driven by pricing gains.

The current gradual uptick in cement prices can be attributed, in large part, to the consolidation phase now largely behind the sector. A wave of mergers and acquisitions in recent years had depressed pricing power as large players competed aggressively on volumes and market share. That pressure now appears to be easing.

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Demand trends are also likely to improve in Q1FY26 on increased labour availability, more demand from the home building segment and influx of government’s infrastructure-related spending. This should make room for further price hikes. IIFL Securities estimates the sector to clock a muted 5% year-on-year volume growth in FY25, but foresees a recovery in FY26 with 6-8% volume growth and better profitability.

That said, cement companies have faced steep earnings downgrades in recent quarters, mainly due to weak realizations. Most players—barring those focused on the south—are expected to report sequential improvement in realizations in Q4FY25. Still, meaningful earnings upgrades will depend on whether price improvements sustain through Q1FY26, backed by better pricing discipline and demand support.

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The near-term outlook, however, remains clouded by global trade uncertainties and a fresh spike in energy costs. So far in 2025, share performance of pan-India focused cement makers has been mixed, with UltraTech Cement Ltd and Ambuja Cements Ltd fetching marginally positive returns and ACC Ltd down 2%.