India Cement - More price hikes warranted to protect spreads

Research evidence excerpt

India Cement - More price hikes warranted to protect spreads

Global Markets Research

2 June 2026India Cement

EQUITY: CONSTRUCTION MATERIALS

More price hikes warranted to protect spreads Research Analysts

India Construction Materials

Margin comfort fades as input cost escalates; require another set of price Jashandeep Singh Chadha - NFASL

hikes in June’26 jashandeep.singhchadha@nomura.com

+91 22 40374124

Spread trends remain challenging; fuel inventory benefits to differentiate 1Q performance

Spot cement spread, a key leading indicator of industry unitary EBITDA, is at INR2,542/t,

down INR47/t vs 4QFY26. On a 1QFY27 average basis, spreads are tracking at INR2,495/t,

implying a q-q decline of INR90/t as elevated fuel costs more than offset recent pricing actions.

While the industry has successfully implemented ~INR10/bag q-q price hike in 1Q so far, pricing

power appears increasingly insufficient to fully counter ongoing cost inflation. As a result, margin

protection will likely require additional price increase in the coming months. Spot fuel costs

generally take 60-90 days to be fully reflected in the income statement due to longer transit

times and inventories. The 60-day fuel cost-lagged spread indicates decline of ~INR60/t vs the

4QFY26 average spread; however, the 90-day-lagged spread suggests a improvement of INR78/t

due to lower fuel inventory costs, suggesting players with longer inventory cycle would report better

margins in 1Q vs peers. (Cementspreadiscalculatedascementrealizationnettingofffueland

freightcosts.Weassumeapetcokemixof60%andaroadmixof70%).

Cost headwinds persist, making price hikes essential to protect spreads

Following the escalation of West Asia conflict, average 1QFY27TD imported pet coke price is up