Citi has sounded a note of caution on India’s cement sector, warning that FY27 could prove to be a challenging year amid weak pricing trends, declining profitability metrics, and demand headwinds linked to slower government spending and a potentially weak monsoon. While the brokerage sees near-term pressure on utilization levels and margins, it remains constructive on select names, backing Ultratech Cement and JSW Cement as its top picks and assigning ‘buy’ ratings to players such as Grasim, Shree Cement, Dalmia Bharat, Nuvoco Vistas, and JK Cement, even as it maintains a cautious stance on others including Ramco Cement.
Notably, earlier this month, all-India cement prices remained largely flat on a month-on-month basis in May 2026 at around Rs 396 per bag, even as they stayed about Rs 15 per bag above the exit levels seen in the March quarter of FY26. A planned price hike of Rs 20–25 per bag in early May failed to gain traction, as weak demand conditions and heightened competition across regions limited its effective implementation.
At the same time, input cost pressures have intensified, further squeezing margins for cement makers. International pet coke prices rose to about USD 153 per tonne, up 18 per cent compared to the fourth quarter of FY26, while domestic pet coke and coal prices also saw increases of 7 per cent month-on-month and 6 per cent month-on-month, respectively. According to an earlier report by Nirmal Bang, margin pressure is likely to persist, with the industry requiring a cumulative price hike of Rs 25–30 per bag to fully offset the ongoing cost inflation.
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