India's top cement producers are forecast to post robust volume growth during the fourth quarter of FY26. Analysts point to stronger construction activity and significant government capital spending as the primary catalysts driving demand.
Despite the anticipated jump in consumption, profitability is expected to face persistent pressure. This challenge stems primarily from escalating fuel and packaging costs linked to the ongoing West Asian conflict.
Domestic Demand Fuels Strong Volume Outlook
The sector is backed by significant macroeconomic tailwinds. A recent report noted that capital-intensive sectors such as cement and metals stand to benefit substantially from the government's infrastructure spending initiatives.Total cement demand is expected to rise by 6–7 per cent, while the steel sector is projected for a robust growth of around 8 per cent. This strong foundational demand narrative supports the volume outlook for the quarter.
Motilal Oswal Financial Services forecasted approximately 10 per cent year-on-year growth in revenue for their cement coverage universe. Furthermore, the brokerage estimated a solid 4 per cent growth in EBITDA.
Profit Margins Squeeze Amid Input Cost Spike
While volumes are set for a rally, the picture for pure profitability remains mixed. Due to rising operational costs, profit after tax (PAT) is estimated to slip by around 1 per cent in Q4 FY26.Analysts noted that EBITDA per tonne is expected to fall about 6 per cent year-on-year, dropping to approximately ₹950. However, this figure is projected to rise 15 per cent quarter-on-quarter, benefiting from strong operating leverage.
Average EBITDA margins (excluding Grasim) are also anticipated to ease about 1.2 percentage points year-on-year, settling at around 18 per cent.
Inventory Buffer Provides Short-Term Respite
Rising energy costs present a key concern, particularly since power and fuel costs account for roughly 30 per cent of overall production costs. Imported petcoke and coal prices rose significantly, averaging 15–20 per cent month-on-month in March alone.However, firms typically maintain around 45 days of fuel inventory. This inventory acts as a temporary buffer, limiting the immediate impact of energy cost hikes on Q4 profitability. Experts anticipate that the full brunt of higher commodity prices will only be felt from Q1 FY27 onwards.
Realisation and Pricing Dynamics
Pricing in the sector showed fluctuation throughout the year. Pan-Indian prices rose sharply in January by ₹7-10 per bag, moderated in February to ₹2-3 per bag, and rebounded to ₹4-5 per bag in March.These dynamics translate to an expected 1-3 per cent year-on-year growth in realization during the quarter. Experts caution that while higher petcoke and coal prices are a monitoring point, the immediate financial impact is mitigated by current inventory levels.
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