- Cement Makers Balance Demand Strength with Cost Inflation

Cement makers are focusing on volume growth in the seasonally strong March quarter (Q4FY26) to meet year-end targets. Healthy demand, aided by infrastructure momentum, has supported marginal price hikes in February, particularly in western markets. However, rising fuel costs—especially imported petroleum coke—pose a risk to margins in FY27. For now, Q4 is expected to deliver sequential earnings improvement, but sustainable price hikes remain the key trigger for meaningful upgrades. Pricing & Demand Trends - West India: Prices up ~3% sequentially, averaging ₹366/bag (Jefferies, 1 March). - Dealers in Ahmedabad: Companies attempting gradual hikes to revert to pre-September levels. - Infrastructure projects: Mumbai–Ahmedabad bullet train work driving regional demand. - Pan-India players

and positioned to benefit. - Labour shortages during Holi may limit steep hikes in March. Earnings Outlook (Q4FY26) - JM Financial expects EBITDA/tonne expansion >₹200 sequentially. - Volume push and marginal price hikes to aid profitability. Cost Pressures - International coal and imported petroleum coke prices rising with crude oil. - US CFR petroleum coke: +₹13/tonne MoM in Feb, spot at $135/tonne (52-week high). - Cost escalation: ₹140–150/tonne (~₹7–8/bag). - Power & fuel costs: 30–35% of production cost. - Profitability impact expected from H1FY27, given 2–3 month fuel inventory lag. - Fuel mix exposure: UltraTech (45% petcoke), (60%), (76%). Outlook & Risks - Costs may rise further amid Middle East tensions. - Companies may attempt price hikes in April to offset inflation. - Demand outlook remains strong, supported by infrastructure and housing. - Cost-saving initiatives: Increased use of alternative fuels to counter volatility. - Key trigger: Adequate and sustainable price hikes needed for earnings upgrades.