Cement manufacturers are planning to raise wholesale prices in Andhra Pradesh and Telangana by Rs 30-40 per 50-kg bag from September 5, according to dealer inputs. The proposed increase could translate into an around 10% rise in wholesale cement prices in the two states. A-category cement, currently priced at around Rs 285 per 50-kg bag, is expected to rise to Rs 315, marking an increase of Rs 30 or about 10.5%. B-category cement, currently available at around Rs 250 per bag, could increase to Rs 275, representing a 10% rise. While companies are looking at a broader Rs 30-40 per bag increase, dealer inputs suggest the actual increase could vary across brands and categories.
In Q1FY27, cement volumes grew by high single digits with blended realisations up quarter-on-quarter but flat year-on-year. However, EBITDA per tonne declined by 7-8% quarter-on-quarter and 15% year-on-year to around ₹1,005 per tonne, with EBITDA margins contracting by 200 basis points year-on-year or more. Production costs rose by 10-11% while transport and logistics costs also increased significantly. Most producers took price increases to offset higher power, fuel, diesel and packaging costs, though the sustainability of price increases remains region-specific.
The proposed increase in Andhra Pradesh and Telangana comes after cement makers raised prices by around Rs 10 per bag in Tamil Nadu, Kerala and Karnataka in August. Cement prices in these markets are currently around Rs 310-315 per bag in Tamil Nadu, Rs 320 in Kerala and Rs 320-330 in Karnataka. While the North, Central and West regions saw strong demand, demand was soft in the South and East due to infrastructure spending slowdown. Most companies are bullish on eastern demand in H2FY27, with management commentaries across producers remaining positive despite near-term margin pressures.
Most companies expect cost increases of ₹80-150 per tonne in Q2FY27 from high fuel, diesel and maintenance costs. UltraTech expects costs to increase by ₹130-140 per tonne quarter-on-quarter, while JK Cement expects a ₹150 per tonne increase and Dalmia expects ₹70-80 per tonne. Power and fuel costs increased by double digits due to geopolitical factors, with pet coke costs trending higher. Despite near-term profitability pressure, companies with superior volume growth, strong cost-reduction levers and better footprints in favourable regions are expected to gain market share.
The industry added 35 MTPA of new capacity in FY26, with another 40-45 MTPA expected to come online in FY27. UltraTech commissioned 8.7 MTPA of cement grinding capacity and is targeting grey cement capacity of 212.7 MT in FY27 and 237 MT by FY28-end. JK Cement is targeting 22-23 MT of grey cement volumes, implying double-digit growth, while Shree Cement has retained its 8% volume growth expectation for FY27. Demand is expected to regain momentum in Q3FY27 and strengthen through Q4FY27, supported by infrastructure, housing, stronger rural consumption and industrial activity.
