Cement sector faces fresh fuel cost pressure

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 Indian cement companies could face ₹150-200 per tonne of power and fuel cost inflation in Q2-Q3 FY27 as global petcoke and thermal coal prices have risen around 20% since July-end. Morgan Stanley expects the pressure to remain elevated through Q2 and Q3 FY27. What happened? Inventory buffers and higher domestic coal usage have delayed the impact so far. However, Morgan Stanley expects companies may need to raise cement prices by around ₹10-15 per bag, including GST, over the next 2-3 months to offset the higher costs. Why does it matter? Fuel and power are major cost components for cement makers. Higher costs can pressure margins if companies cannot pass them through. At the same time, cement volume growth remains healthy at around 7-8% YoY, giving some support to pricing. My view The key issue is pricing power. Cost inflation by itself is manageable if price increases hold. The risk is that weak monsoon conditions and regional competition limit the ability to pass on higher costs. ICRA also expects cement operating margins to decline by 1.5-2.5% in FY27 because of higher input costs. What I am watching next I would track petcoke and coal prices, cement price hikes and post-monsoon demand. The next 2-3 months should show whether higher costs can be passed through without weakening volumes. No Recommendations Source: NDTV Profit Disclosure: I hold a long position in JSW Cement Limited (