Indian cement companies are revising their growth expectations downwards amid mounting cost pressures. According to The Economic Times, companies anticipate demand slowing to a 5-7% increase this fiscal year, down from the 8-9% growth recorded in FY26. Shree Cement's managing director Neeraj Akhoury highlighted that the geopolitical conflict in the Middle East and forecast of moderate monsoon conditions may act as headwinds for the sector, potentially impacting growth momentum in the short-term. This revision comes as Moody's Ratings has also cut India's economic growth forecast for 2026 by 0.8 percentage points to 6% on subdued private consumption, capital formation, and industrial activity amid higher energy costs triggered by the West Asia war.
Companies are facing significant cost pressures with suppliers crunch of bags and rising cost of PP granules leading to increased packing costs. As reported by The Economic Times, the five largest cement companies - UltraTech Cement, Adani Cement, Shree Cement, Dalmia Bharat, and Nuvoco Vistas Corp - are expecting an impact of about ₹150 per tonne on operating profit in the current quarter. These companies made an operating profit of ₹887-1,253 per tonne of cement sold in the March quarter, with Adani Cement's profitability the lowest and UltraTech Cement's the highest. The cost pressures are being exacerbated by higher energy costs stemming from the West Asia war, which can potentially limit planned capital expenditure and keep inflation elevated.
Despite continued price hikes, cement makers believe the increases may not be sufficient to offset total cost increases. According to The Economic Times, companies raised prices by around ₹20 per 50 kg bag in April, with another round of ₹10-15 per bag implemented in May. However, Nuvoco Vistas Corp's MD Jayakumar Krishnaswamy noted that with blended cost of fuel, diesel price hike, bags, gypsum and other materials, he is looking at cost inflation of close to ₹200 per tonne. He indicated there remains a gap between costs and price increases, net of GST. Moody's projects India's inflation to remain at 4.5% in 2026 and 4.3% in 2027, both higher than previously estimated, due to persistently high energy costs.
Adani Cement, the country's second largest cement producer, has pushed back its target of 155 million tonne production capacity in a bid to recalibrate costs. As reported by The Economic Times, CEO Vinod Bahety indicated that target plans of FY28 could move a year or two, with a safer timeline of FY30. This represents a significant shift in the company's expansion strategy amid current cost pressures.
Adding to cost pressures, Shree Cement has received a ₹39,19,286 GST demand order from the Assistant Commissioner, Central GST & Central Excise, Pali on May 11, 2026. The company stated the demand order does not have a major financial impact and intends to file an appeal under Section 85 of the Finance Act, 1994 before the Commissioner (Appeals) within 2 months. The alleged violation pertains to non-payment of service tax, with the company believing it has a strong case on merits.
