That is the assessment of Ashutosh Murarka, Equity Research Analyst at Choice Institutional Equities, who estimates the geopolitical shock could inflate total production costs by ₹150 to ₹200 per tonne — a hit that would directly compress EBITDA margins across the board.
Petcoke, freight, and packaging: A triple cost squeeze
Power and fuel account for roughly 30% of total cement manufacturing costs, and most major producers source 50–60% of that fuel requirement from imported petcoke. With crude-linked energy prices rising sharply on the back of Middle East tensions, that exposure is now a significant liability.
But petcoke is only part of the story. Freight rates are rising in tandem, and polypropylene bags — the standard packaging material for cement — are experiencing a sharp price surge due to their direct linkage to crude oil prices. An LPG supply crunch is adding further pressure on packaging costs, with Murarka estimating a 20% spike in that segment alone.
“Packaging cost will weigh on EBITDA by around ₹50–60 per tonne,” Murarka told ET Now. “Overall, EBITDA will be impacted by around ₹150 to ₹200 per tonne because of these war situations.”
To offset the damage, companies would need to push through a 4–5% increase in cement realisations. Whether the market will absorb that is a different question entirely.
Price hikes attempted — and mostly rolled back
The pricing picture heading into the fourth quarter has been far from encouraging. Companies attempted hikes of ₹15–20 per bag during the quarter, but the majority were reversed as oversupply in the industry undercut any pricing discipline.
Looking into April, Murarka expects fresh hike attempts of ₹7–8, but flags that their sustainability will depend entirely on demand-supply dynamics. The cement industry is on track to add 140–150 million tonnes of new capacity by FY28, while current utilisation rates sit at just 65–70%. In that environment, sustained price increases are structurally difficult.
“If utilisation levels increase to 75%, we can expect some positive momentum in pricing,” he said. “Otherwise, prices are expected to remain gradual or volatile.”Regional disparities are stark. The north has shown the most pricing resilience, with hikes of ₹10–15 holding reasonably well. The south remains the weakest market due to intense competition. The east has seen rollbacks similar to the national trend, again driven by excess capacity.
Where analysts are placing their bets
Despite the near-term headwinds, Murarka identified two names he favours within the cement pack. The first is Nuvoco Vistas, where the acquisition of Vadraj Cement is set to add 6 million tonnes of capacity in an underpenetrated region, offering meaningful volume upside alongside a better premium product mix than peers. The second is UltraTech Cement, which continues to command preference on the basis of scale and execution track record.
For investors, the message is nuanced. The cost shock is real and near-term margins will take a hit. But for companies with the scale to weather the squeeze and the regional positioning to hold price, the medium-term case remains intact — particularly if industry utilisation trends in the right direction through FY26 and beyond.