Cement companies to see strong volumes in Q2 but fuel costs may weigh on margins

MUMBAI - Cement companies are likely to report healthy volume growth in the September 2026 quarter, supported by improving demand and capacity additions. However, profitability is likely to be at the lowest in nearly two years in the September quarter, weighed down by higher operating costs, especially that of fuel. While Ultratech Cement and JK Cement are expected to lead on volume growth, margin compression could weigh earnings across most cement makers despite a gradual recovery in cement prices.

Power and fuel costs together account for about a third of the total production costs for cement companies. The continued crisis in West Asia has led to a spike in prices of international pet coke and coal. Companies also faced higher costs of logistics and packing bags; combined with the annual maintenance and shutdowns that companies generally take during the quarter, this has added to the cost pressures during the quarter.

Cement companies have increased prices by Rs 15-20 per 50 kg bag, while costs have risen by at least Rs 200 per tonne. Every $10 per tonne increase in the cost of fuel results in a corresponding increase of Rs 40–50 per tonne for cement makers. Shree Cement seems to be the most exposed to international fuel prices, DAM Capital said in a report.


“Pricing improved in Sep-26 but more hikes are needed to keep rising costs at bay,” Nuvama Institutional Equities said in a pre-earnings note.

Ultratech Cement is expected to report healthy double-digit volume growth, aided by improving demand and market-share gains. While realizations are likely to remain broadly stable year-on-year, higher input costs may weigh on margins.

JK Cement is expected to deliver strong revenue growth supported by 20% volume growth, capacity ramp-up and healthy demand across both grey and white cement segments and modest realization improvement. However, rising fuel and operating costs means profit growth may trail top line growth.

Ambuja Cements is expected to report a subdued revenue growth amid low single-digit volume growth. Profitability may remain under pressure, with per tonne operating profit before depreciation and amortisation (EBITDA) expected to decline sharply by around 30%. Key monitorables include demand recovery, cement price trends, ramp-up of new capacities, and the pace of cost savings from Adani Group synergies.

Shree Cement is expected to report mid-high single digit volume growth supported by improving demand and capacity additions. Revenue is likely to increase on the back of higher volumes, although realizations may remain under pressure sequentially. EBITDA per tonne is estimated to drop nearly 24% compared with last year.

In the near term, pricing actions taken by companies will be critical amid expectations of firm input costs. “With the industry entering its seasonally stronger period, industry players have announced further price hikes of INR 10–20/bag across most markets in October 2026, although the extent of absorption and sustainability remain the key variables to monitor,” JM Financial Institutional Equities said.