West Asia conflict to weigh on cement sector margins in 2026-27
Operating profitability for Indian cement companies is expected to moderate in 2026-27 as higher power and fuel prices and rising selling costs linked to geopolitical tensions in West Asia weigh on margins, a report said on Wednesday.
The report from ICRA highlighted that the OPBIDTA per tonne for its sample set of cement companies is projected to ease by 10–15 per cent to Rs 820–870 per metric tonne in 2026-27, from an estimated Rs 950–980 per metric tonne in 2025-26.
Moreover, cement prices are expected to increase by 3-5 per cent in FY2027, following a marginal recovery of roughly 2 per cent in FY26.
Industry players have initiated price hikes of Rs 10-12 per bag in April 2026, although the extent of cost pass-through remains contingent on demand-supply dynamics.
Despite cost pressure, the sector’s credit profile remains stable and debt protection metrics are likely to remain comfortable.
In addition, power, fuel and selling costs constitute 50-55 per cent of the total operating costs for cement companies.
The ongoing West Asia conflict has raised global crude oil prices, increasing costs of key inputs such as petcoke, diesel and polypropylene for cement companies, which are likely to weigh on their operating profitability, the report noted.
“The crude-linked cost pressure poses a key risk, particularly if geopolitical tensions persist.
In 2026-27, power and fuel costs are set to rise, driven by the uptick in petcoke prices, tightening fuel markets and likely rise in coal prices,” said Anupama Reddy, Vice President and co-group head, corporate ratings, ICRA.
Higher logistics costs and a depreciating rupee are expected to increase the landed cost of fuel.
Overall, power and fuel costs are likely to increase by 10-12 per cent, while selling costs could rise by 6-8 per cent in 2026-27, owing to higher freight and packaging expenses, the report forecasted.
The cement companies, however, are expected to mitigate a part of the impact through price pass-through, thereby cushioning the overall profitability.
The ratings agency projected crude to average $95 per barrel in 2026-27 in its baseline scenario, compared to about $72 per barrel in 2025-26.
