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Informist, Friday, Jul. 24, 2026

 

MUMBAI/NEW DELHI – While domestic cement demand is expected to grow around 6-7% in 2026-27 (Apr-Mar) as per UltraTech Cement Ltd., the country's largest cement manufacturer has highlighted three key factors which could affect this and merit close monitoring throughout the year. These factors include the trajectory of crude oil and petroleum coke prices, the actual realisation of the south-west monsoon in India, and the evolution of the tariff policies by the US, the cement major said in its annual report for FY27.

 

The war in West Asia has led to a surge in prices of crude oil over the last few months. The next trajectory of oil prices and petroleum coke prices will determine the "pace of pricing" actions by cement majors across regions, UltraTech said. The actual realisation of monsoon this year, against the India Meteorological Department's forecast of below-normal rains, will influence demand from rural areas in the second half of the year. "Third, the evolution of United States (US) tariff policy and the consequent pressure on the rupee will shape the external-sector backdrop and the affordability of imported inputs," the company said.

 

Domestic demand rose by 6.4% in FY26, broadly tracking output. Industry estimates show an on-year demand growth of 6.0-7.5% this year, with leading rating agencies projecting 6-8% growth, the company said.

 

In a post-earnings conference call, the management said the September quarter will see the full impact of elevated costs due to the West Asia crisis, along with monsoon. For the June quarter, the company saw over 20% rise in the cost of material consumed to INR 41.29 billion and over 11% rise in power and fuel expenses. The management said that industrial diesel prices went up almost 50% to INR 157 per litre from INR 100 per litre. "So this diesel is a very big component in limestone leasing costs, which impacted our raw material costs," the management had said, adding that petcoke has become more expensive in energy terms than coal.

 

Regarding monsoon, the industry expects prices to hold broadly steady through the monsoon quarter due to the impact of increase in costs, as per the management. 

 

A recent report by rating agency Crisil said elevated input costs due to the West Asia war will reduce the operating margin of cement makers by INR 50–INR 75 per tonne to INR 925–INR 950 per tonne in FY27.

 

"The West Asia conflict is expected to shave (INR) Rs 50-75 per tonne off cement makers' profitability this fiscal. This will be driven mainly by higher power and fuel costs, which account for about 30% of total costs, as petcoke and imported coal prices have surged amid the geopolitical uncertainties," the rating agency said, adding that freight costs, accounting for about a quarter of total costs, are also likely to remain elevated because of higher diesel prices. "The hit will be harder in the first half, before easing commodity prices help moderate cost pressures later in the year." The rating agency expects the sector's earnings before interest, tax, depreciation and amortisation to decline to INR 925–INR 950 per tonne from INR 1,000 per tonne.

 

For the June quarter, the cement major's consolidated net profit increased 17% on year to INR 25.99 billion on the back of a 16% revenue growth at INR 246.48 billion. Friday, shares of UltraTech ended 0.5% lower at INR 11,846 on the National Stock Exchange.  End

 

Reported by Ashutosh Pati and Astha Oriel

Edited by Akul Nishant Akhoury

 

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