Cement Prices: Nomura Sees Rs 15 Per Bag Hike Needed

Nomura estimates that cement companies need to raise prices by Rs 12 to Rs 15 per bag to fully offset rising fuel costs. The brokerage said the industry has started increasing prices, with Rs 10 per bag hikes announced for October 2026, but further increases may be needed to protect profit margins.

The pressure comes from higher imported petcoke prices, which rose around 25% quarter on quarter in October 2026 to $184 per tonne. Nomura expects much of the impact from these higher fuel costs to reach cement companies' income statements in the fourth quarter of FY27, making timely price increases important.

Nomura named UltraTech Cement among its top picks in the cement sector. The brokerage said cement companies have a limited window to pass on higher costs before seasonal demand weakens towards November and December.

Cement companies face higher fuel costs

Fuel is a major input cost for cement manufacturers. The recent rise in imported petcoke prices has increased the pressure on companies to raise selling prices and protect their operating margins. Nomura said the industry needs price increases of Rs 12 to Rs 15 per bag to fully cover the additional fuel costs.

The industry has already announced price hikes of Rs 10 per bag for October 2026. However, the announced increases need to be absorbed by the market, and further pricing action may be required to meet the estimated cost pressure. The gap between the announced increase and the amount Nomura believes is necessary indicates that companies may need additional price hikes.

Particulars	Details
Required cement price hike	Rs 12 to Rs 15 per bag
Announced October 2026 hike	Rs 10 per bag
Imported petcoke price	$184 per tonne
Quarter on quarter rise in petcoke	About 25%
Cement spreads	Rs 2,492 per tonne
Cement spreads versus two year average	3% lower

The extent to which manufacturers can implement these increases will depend on market demand and dealer acceptance. If companies cannot pass on higher costs, their margins could come under pressure.

Why the timing of cement price hikes matters

Nomura said October is generally the strongest period for cement price increases because pricing absorption tends to be better before demand starts moderating in November and December. This creates a limited period for manufacturers to implement higher prices and secure better realisations.

The festive season can affect construction activity as labour availability and the number of working days become constraints. These factors may make it harder for cement companies to push through further increases later in the quarter. Nomura believes most of the required pricing action needs to be captured before this seasonal slowdown begins.

For manufacturers, announcing a price increase does not automatically mean the full increase will be realised. Dealers need to accept the revised prices, and market conditions must support the higher rates. If demand weakens before the increases are fully absorbed, companies could struggle to recover the rise in fuel expenses through selling prices.

The difference between announced prices and actual price realisation will therefore matter when assessing the industry's margin outlook for the coming quarters.

Higher fuel costs may affect margins in Q4FY27

The impact of rising fuel prices may not appear immediately in reported financial results. Nomura estimates that spot fuel costs generally take 60 to 90 days to flow fully into income statements because of transit times and existing inventories.

This delay could limit the effect of October's fuel price increase on cement companies' results for the third quarter of FY27. However, the pressure is expected to become more visible in the fourth quarter of FY27, when higher fuel costs are more fully reflected in expenses.

Period or factor	Nomura's assessment
Q3FY27	Limited impact expected from the recent spot fuel price increase
Q4FY27	Most of the lagged fuel cost pressure may flow through
Fuel cost transmission period	60 to 90 days
Main margin protection measure	Timely absorption of price hikes

The timing of cost transmission gives cement companies some near term relief, but it does not remove the underlying pressure. If selling prices rise sufficiently before the higher fuel expenses reach reported results, companies may be better placed to protect margins. If price increases are delayed or rejected, the effect could become more visible in quarterly profitability.

Cement spreads remain below the two year average

Cement spreads, which measure the relationship between cement realisations and relevant production costs, are an important indicator of operating profitability. Nomura said the industry's cement spreads currently stand at Rs 2,492 per tonne, around 3% below the two year average.

The brokerage considers spreads reasonably resilient at present but expects pressure could emerge in Q4FY27 as higher fuel costs feed through. The direction of spreads will depend partly on whether manufacturers can raise prices enough to cover the additional expenses.

If cement prices increase while input costs stabilise, spreads could receive support. However, continued fuel cost increases or weak demand could make it harder to preserve the current level. Nomura warned that failure to absorb announced price hikes fully could quickly translate into margin compression.

The current spread level also provides a reference point for monitoring the industry's performance as the fuel cost increase moves through the financial results.

Market analysis: demand and dealer acceptance will matter

The cement industry's near term outlook depends on two connected factors: input costs and the ability to pass those costs on to customers. Higher petcoke prices increase production expenses, while seasonal demand patterns may restrict manufacturers' ability to raise selling prices.

October's announced price increases indicate that the industry has started responding to the cost pressure. However, the final impact will depend on actual price realisation rather than announcements alone. Dealer acceptance will be important because manufacturers need to convert planned price increases into higher realised prices.

This cost pressure is relevant across cement manufacturers, including UltraTech Cement, which Nomura has identified as a top pick in its coverage. The brokerage's preference does not remove the wider industry's exposure to fuel costs or seasonal demand conditions.

Investors tracking other brokerage views on Indian companies can also review the outlook for Petronet LNG and its expected volume recovery and the latest GE Shipping stock outlook from Nomura. These cover different sectors, but illustrate how brokerage assessments can focus on company specific operating factors and expected changes in performance.

What investors should watch

The next few months will help show whether cement manufacturers can recover the increase in fuel expenses through higher selling prices. The October price realisation data and the pace of additional price hikes are the immediate factors Nomura expects the market to monitor.

The main developments to track are:

• Actual realisation of the Rs 10 per bag price hikes announced for October 2026.
• Whether cement companies implement further increases towards the estimated Rs 12 to Rs 15 per bag requirement.
• Imported petcoke prices and whether fuel cost inflation continues.
• Cement spreads as higher input costs feed into results during Q4FY27.
• Dealer acceptance and construction demand as seasonal activity moderates in November and December.

Nomura's assessment points to a narrowing window for cement companies to recover higher fuel costs before seasonal demand weakens. The extent of price realisation during October, followed by the industry's ability to sustain increases, will help determine how much pressure reaches operating margins in the fourth quarter of FY27.

Frequently asked questions

How much do cement companies need to increase prices by?

Nomura estimates that cement companies need to raise prices by Rs 12 to Rs 15 per bag to fully offset incremental fuel costs. The industry has announced increases of Rs 10 per bag for October 2026, but additional pricing action may be necessary.

Why are cement companies raising prices in October 2026?

Cement companies are responding to higher input costs, particularly imported petcoke prices. Petcoke rose around 25% quarter on quarter to $184 per tonne in October 2026, increasing pressure on manufacturers to protect their margins.

When will higher fuel costs affect cement company results?

Nomura expects much of the recent fuel cost pressure to flow into cement companies' income statements in Q4FY27. Spot fuel costs typically take 60 to 90 days to be fully reflected because of transit times and inventory levels.

What are cement spreads currently?

Cement spreads stand at Rs 2,492 per tonne, according to Nomura. This is around 3% below the two year average, and the brokerage expects pressure could emerge in Q4FY27 as higher fuel costs flow through.

Why is October important for cement price increases?

October is historically a stronger period for cement price realisation before demand moderates in November and December. Nomura said seasonal constraints, including labour availability and fewer working days, could make further price increases harder to implement later.

Which cement stock has Nomura named as a top pick?

Nomura has named UltraTech Cement among its top picks in the cement sector. The brokerage also highlighted fuel costs, price realisation and dealer acceptance as factors affecting the industry's near term margin outlook.