New Delhi: New cement price increases and a seasonal revival in demand are expected to support an improvement in the sector’s operating performance in the third quarter of FY27, although persistent cost inflation and additional capacity additions could limit the extent of margin recovery, according to a research report by Dolat Capital.
The brokerage expects cement companies’ EBITDA per tonne to increase by Rs 135, or 16.2 per cent, sequentially in Q3FY27, supported by a projected 2.1 per cent increase in blended realisations and a 0.3 per cent decline in operating expenses per tonne.
The report noted that cement prices in the trade segment increased by Rs 9 per bag in October 2026, following a Rs 6 per bag hike in September. Non-trade prices also increased by Rs 5-20 per bag across markets during October.
“This price increase is expected to partially offset cost pressures in Q3FY27 (cement bag + petcoke/coal + diesel) to a decent level, while price hike post Diwali in Nov-Dec’26 may further ease cost pressures,” the report said.
Q2FY27 Revenue Rises 13.9%, But EBITDA Declines
Reviewing the September quarter performance, Dolat Capital said the cement sector’s coverage universe reported a 13.9 per cent year-on-year increase in revenue to Rs 589.8 billion, supported by 9.7 per cent growth in volumes to 103.7 million tonnes and a 3.9 per cent rise in blended realisations to Rs 5,690 per tonne.
However, EBITDA declined 1.8 per cent year-on-year to Rs 86.5 billion, while EBITDA per tonne fell 10.4 per cent to Rs 834. Total operating costs per tonne increased 6.8 per cent year-on-year to Rs 4,855, with power and fuel costs rising 15.5 per cent to Rs 1,420 per tonne.
Cost Inflation Remains Key Concern for Cement Companies
The brokerage said industry volume growth remained healthy at around 8-9 per cent during Q2FY27 and H1FY27, supported by infrastructure and housing demand.
“Cost inflation remains a key monitorable for FY27,” the report said, adding that companies expect further cost pressures in Q3FY27 amid geopolitical tensions, although internal cost-saving measures could provide partial relief.
Dolat Capital estimates revenue and EBITDA to grow at compound annual growth rates of 11.1 per cent and 13.4 per cent, respectively, over FY26-29.
However, the brokerage cautioned that incremental cement supply of around 173 million tonnes per annum during FY26-29 would exceed incremental demand of approximately 122 million tonnes, potentially restricting meaningful price increases. It said managing profitability through volume growth, cost efficiency and premiumisation would remain critical for the industry.