Cement manufacturers in India are likely to witness a sharp decline in profitability in the current financial year due to the elevated energy costs that could weigh on margins, said Crisil Intelligence in a report.
The decline is primarily attributed to a surge in energy prices triggered by geopolitical tensions in West Asia, which have significantly increased power and fuel expenses, a key cost component accounting for 26-28 per cent of total costs, the report said.
Further, in a report, Motilal Oswal Financial Services said in the March quarter of FY26 (Q4 FY26), top cement companies are expected to post healthy volume growth. This will be supported by stronger construction activity and government capital expenditure. However, profitability is likely to remain under pressure due to rising fuel and packaging costs, it said.
Analysts reported their cement companies to report about 10 per cent year-on-year (Y-o-Y) growth in revenue and 4 per cent Y-o-Y growth in earnings before interest, taxes, depreciation and amortisation (Ebitda). Profit after tax (PAT) may decline about 1 per cent in Q4 FY26.
Aggregate cement volumes are estimated to rise about 9 per cent to 126 million tonnes, led by improved project execution and a pickup in construction activity.
Power and fuel costs are expected to rise 10-12 per cent on-year, driven by higher prices of crude oil, pet coke, and thermal coal. Brent crude prices surged sharply in recent months and are projected to remain elevated and volatile, averaging USD 82-87 per barrel this fiscal, Crisil said.
Additionally, industrial diesel prices have risen by around 25 per cent in March, adding further pressure through higher logistics and raw material procurement costs, it added.
Notably, the West Asia crisis has led to a 11-23 per cent correction in the stock prices of cement companies.