India: Cement manufacturers in India are likely to witness a sharp decline in profitability in the current 2027 financial year (FY2027), as elevated energy costs weigh on margins, according to a report by Crisil Intelligence. The report estimates that operating margins of companies in the sector will contract by 150-200 basis points (bps) year-on-year to 16-18% in FY2027, reversing the 260-280 bps increase seen in the previous year.
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% of the sector’s costs. Crisil noted that power and fuel costs are expected to rise by 10-12% year-on-year, driven by higher prices of crude oil, petcoke, and thermal coal.
Brent crude prices surged sharply in recent months and are projected to remain elevated and volatile, averaging US$82-87/barrel over the course of FY2027. Additionally, industrial diesel prices rose by around 25% month-on-month in March 2026, adding further pressure through higher logistics and raw material procurement costs.
"Geopolitical disruptions will intensify cost pressures for cement makers in the first half of FY2027. A surge in energy prices, along with moderate increases in raw material and freight costs, will push total costs up by 4-6%," said Sehul Bhatt, Director, Crisil Intelligence.
