Are Cement Makers Ready for a 2.5–3.5% Profit Boost?
Click to start listening
Synopsis
Discover the latest insights into the cement industry as manufacturers brace for a profit surge of 2.5% to 3.5% this fiscal year. Factors like volume growth and premiumisation are driving these optimistic projections, despite challenges from GST reductions. Stay ahead with the essential details that impact the cement market.
Key Takeaways
- Profit Growth: Cement manufacturers forecast a profit increase of 2.5% to 3.5%.
- Volume Surge: Anticipated growth in cement volumes of 6.5% to 7.5% year-on-year.
- GST Impact: Changes in GST may impact retail prices but won't hinder overall profitability.
- Stable Prices: Average pan-India cement prices are expected to remain stable.
- Operating Margins: Expected expansion of operating margins to 18% to 20%.
New Delhi, Dec 9 (NationPress) The profitability of cement manufacturers is projected to increase by approximately 2.5% to 3.5% this fiscal year, driven by enhanced earnings resulting from greater volumes and premiumisation, despite stable selling prices and input costs, according to a report released on Tuesday.
While the reduction of the goods and services tax from 28% to 18% is anticipated to exert pressure on retail prices, the boost in premiumisation and heightened demand is expected to counterbalance this impact, thereby improving profitability for manufacturers, as per a report from Crisil Intelligence.
Cement volumes are predicted to grow by 6.5% to 7.5% year-on-year following a 5% increase in the previous fiscal year, with a moderate 5% growth expected in the first half and a forecasted 8% to 9% surge in the second half, spurred by pent-up demand and improved liquidity.
The report indicates that average pan-India prices are expected to stay within the range of Rs 354 to Rs 359 per 50 kg bag, based on analysis from 14 major manufacturers that account for around 85% of industry revenue.
“During the first half, average pan-India cement prices experienced a modest 3% year-on-year increase,” stated Sehul Bhatt, Director of Crisil Intelligence.
“However, we expect the full ramifications of the GST reform to be felt in the third quarter, resulting in a 4% to 5% decline in retail prices during the latter half of the fiscal year. Despite the subdued pricing, the industry is set to achieve better earnings this fiscal, thanks to robust volume growth,” Bhatt added.
Excluding GST, cement prices are projected to rise by 3% to 4% year-on-year in the upcoming quarter. However, the reduction in GST is likely to lead to an overall price decline, the report pointed out.
Manufacturers reported a 5% increase in earnings during the first half of this fiscal year. The momentum is anticipated to decelerate in the second half, with earnings expected to grow by a modest 0% to 2%.
Raw material costs are expected to remain high due to increasing limestone prices. Crisil forecasts operating margins expanding to 18% to 20% from approximately 16% last fiscal year, as overall costs are projected to stabilize.
Point of View
The cement industry's anticipated profitability increase reflects broader economic trends, including construction demand and material costs. The findings highlight the resilience of the sector amidst challenges, reinforcing the importance of premiumisation in maintaining profitability. This growth could signal positive outcomes for related industries as well.
NationPress
12/12/2025
Frequently Asked Questions
What is the projected profit increase for cement manufacturers?
Cement manufacturers are expected to see a profit increase of about 2.5% to 3.5% this fiscal year.
What factors are contributing to this profit boost?
The profit boost is driven by higher volumes and premiumisation, despite steady selling prices and input costs.
How will GST changes affect retail prices?
The reduction in GST is expected to weigh on retail prices, but higher demand and premiumisation should offset this pressure.
What are the expected cement volume growth rates?
Cement volumes are anticipated to rise by 6.5% to 7.5% year-on-year.
What is the expected operating margin for manufacturers?
Crisil projects that operating margins will expand to 18% to 20% from approximately 16% last fiscal.
