Higher input costs to push cement prices to all- time high in FY22
Cement

Higher input costs to push cement prices to all- time high in FY22

High input costs are expected to push cement retail prices to an all-time high of Rs 400 per bag in FY22.

The main inputs used in the sector are coal and diesel. According to rating agency Crisil, after rising by an average of Rs 10 to 15 per bag since August, another rise of Rs 15 to 20 is likely in the coming months.

Moreover, cement manufacturers' earnings before interest, taxes, depreciation, and amortisation (EBITDA) are expected to fall by Rs 100-150 per tonne in FY22.

According to the rating agency this fiscal year, cement sales are expected to increase 11 to 13% year over year, albeit from a low base. This will largely mitigate the impact of cost pressure on cash accruals while also maintaining credit profiles. The analysis by the agency covers 17 cement companies, accounting for 75% of the total market share.

Crisil Research Director Isha Chaudhary said that as the impact of Covid-19 fades, demand for cement will pick up across all segments, including infrastructure, housing, and industry.

Cement demand grew by more than 20% in the first half of this fiscal year but should moderate to 3 to 5% in the second half due to a high base effect, translating to 11 to 13% growth for this fiscal year.

South India saw the largest increase of Rs 54 per bag in October compared to the previous month, followed by the central region with Rs 20 per bag. North India saw a Rs 12 increase, while west India saw a Rs 10 increase.

Crisil Associate Director Ankit Kedia told the media that while the cost pressure may ease over time as coal and diesel prices fall from their October highs, it will take two to three quarters for this to be reflected in the cost of production.

As a result, cement producers' operating profitability, or Ebitda per tonne, is expected to fall by Rs 100-150, or 300-400 basis points, this fiscal. Absolute profits, on the other hand, will be unaffected because the higher volume will offset the impact of margin moderation.

Image Source

Also read: Cement prices to surge on the back of rising coal costs
Also read: Cement firms in India increase cement costs as input prices inflate

High input costs are expected to push cement retail prices to an all-time high of Rs 400 per bag in FY22. The main inputs used in the sector are coal and diesel. According to rating agency Crisil, after rising by an average of Rs 10 to 15 per bag since August, another rise of Rs 15 to 20 is likely in the coming months. Moreover, cement manufacturers' earnings before interest, taxes, depreciation, and amortisation (EBITDA) are expected to fall by Rs 100-150 per tonne in FY22. According to the rating agency this fiscal year, cement sales are expected to increase 11 to 13% year over year, albeit from a low base. This will largely mitigate the impact of cost pressure on cash accruals while also maintaining credit profiles. The analysis by the agency covers 17 cement companies, accounting for 75% of the total market share. Crisil Research Director Isha Chaudhary said that as the impact of Covid-19 fades, demand for cement will pick up across all segments, including infrastructure, housing, and industry. Cement demand grew by more than 20% in the first half of this fiscal year but should moderate to 3 to 5% in the second half due to a high base effect, translating to 11 to 13% growth for this fiscal year. South India saw the largest increase of Rs 54 per bag in October compared to the previous month, followed by the central region with Rs 20 per bag. North India saw a Rs 12 increase, while west India saw a Rs 10 increase. Crisil Associate Director Ankit Kedia told the media that while the cost pressure may ease over time as coal and diesel prices fall from their October highs, it will take two to three quarters for this to be reflected in the cost of production. As a result, cement producers' operating profitability, or Ebitda per tonne, is expected to fall by Rs 100-150, or 300-400 basis points, this fiscal. Absolute profits, on the other hand, will be unaffected because the higher volume will offset the impact of margin moderation. Image Source Also read: Cement prices to surge on the back of rising coal costs Also read: Cement firms in India increase cement costs as input prices inflate

Next Story
Infrastructure Urban

DCPC Prepares for Special Campaign 5.0 with Focus on E-Waste

The Department of Chemicals and Petrochemicals (DCPC), Ministry of Chemicals and Fertilisers, is gearing up for Special Campaign 5.0, to be held from 2nd to 31st October 2025. The initiative will focus on e-waste disposal as per MoEFCC’s E-Waste Management Rules 2022, space optimisation, and enhancing workplace efficiency across field offices.Special Campaign 4.0, conducted between October 2023 and October 2024, delivered notable results in record management, grievance redressal, scrap disposal, and cleanliness drives.Key outcomes of Special Campaign 4.0Records management: 2,443 physical fil..

Next Story
Real Estate

BlackRock India Leases 1.4 Lakh Sq Ft in Bengaluru

BlackRock Services India, the domestic arm of global asset manager BlackRock, has leased 1.4 lakh sq ft of office space at IndiQube Symphony in Bengaluru, according to Propstack data. The 10-year deal is valued at around Rs 4.10 billion.The lease, among the largest transactions in India’s co-working sector, highlights the growing preference of global institutions for flexible office providers. The agreement, commencing October 1, 2025, covers ground plus five floors in KNG Tower 1 at Ashoknagar, MG Road — one of Bengaluru’s prime commercial hubs.As per the lease document, BlackRock will ..

Next Story
Infrastructure Transport

L&T Bags Rs 25–50 Bn Order for Mumbai-Ahmedabad Bullet Train Track Works

Larsen & Toubro’s (L&T) Transportation Infrastructure business has secured an order valued between Rs 25 crore and Rs 50 billion from the National High Speed Rail Corporation Limited (NHSRCL) for the Mumbai-Ahmedabad High Speed Rail (MAHSR) corridor.The contract, Package T1, involves the design, supply, construction, testing, and commissioning of 156 route km of high-speed ballastless track on a Design-Build Lump Sum Price basis. The stretch runs from Mumbai’s Bandra-Kurla Complex to Zaroli village in Gujarat and includes 21 km of underground track and 135 km of elevated viaduct.Se..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?