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Rising fuel costs are a material near-term margin risk for Indian cement makers, but they do not guarantee that cement stocks will fall. In an April 2026 outlook, CRISIL Intelligence forecast operating margins would decline 150–200 basis points year over year to 16–18% in FY2026–27 as power and fuel costs rose faster than expected cement prices. Company results also show that producers are using fuel, energy and logistics measures to contain the pressure.
Why rising fuel costs can squeeze cement margins
Cement production depends on energy-intensive kiln operations, while diesel also affects freight and procurement. When these costs rise faster than the prices producers realize for cement, less revenue remains as operating profit.
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CRISIL Intelligence’s April 13, 2026 outlook put power and fuel at 26–28% of Indian cement makers’ total costs and forecast that category would increase 10–12% year over year in FY2026–27. It expected total costs to rise 4–6%. These are forecasts, not reported results for the full fiscal year. CRISIL Intelligence’s outlook
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Sehul Bhatt, Director at CRISIL Intelligence, said: “Geopolitical disruptions will intensify cost pressures for cement makers in the first half this fiscal. A surge in energy prices, which will have a pronounced impact on power and fuel expense, and a moderate increase in raw material and freight cost will push total cost up 4-6% this fiscal.”
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Can cement makers pass higher fuel costs on to customers?
They can try to raise prices, but how much of the added cost they can recover depends on demand, local competition, capacity and customers’ willingness to pay. CRISIL expected cement prices to rise 1–3% year over year, to Rs 355–360 per bag, in FY2026–27. It said capacity additions and heightened competition could restrict further increases. The forecast price rise is smaller than the expected increase in power and fuel costs, which helps explain the margin risk. CRISIL Intelligence’s outlook
CRISIL forecast cement demand growth of 6.5–7.5% for the fiscal year. That could support volumes and pricing, but it does not remove the risk that costs rise faster than realized prices. Kinjal Shah, Manager at CRISIL Intelligence, said: “While cement prices will be increased to mitigate the impact of higher cost to some extent, there will still be a dent on profitability. With steady demand growth and price uptick, realisation of players is expected to improve a moderate 2-4% this fiscal, which will offer some respite.”
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What Indian cement companies have reported
ACC
ACC reported FY2026 operating EBITDA of Rs 2,950 crore and an operating EBITDA margin of 11.4%. The company identified fuel, diesel, packaging supply constraints and rupee depreciation as pressures expected to continue into the first half of FY2027. It said its responses included optimizing the fuel mix, increasing renewable-energy use, lowering logistics costs through rail and sea, and maintaining production and inventory discipline. ACC’s FY2026 results
Ambuja Cements
Ambuja reported a 13.4% operating EBITDA margin for Q4 FY2026. It described fuel, diesel, packaging and currency pressures, alongside efforts involving fuel mix, renewable energy, logistics and operating discipline. Its May 2026 release expected industry demand growth of about 5% in FY2027. That company estimate is lower than CRISIL’s April forecast of 6.5–7.5%; they are separate forecasts from different publishers and dates, not a single agreed sector outlook. Ambuja Cements’ FY2026 results CRISIL Intelligence’s outlook
ACC’s and Ambuja’s reported margins cover different periods and should not be treated as a like-for-like ranking or as direct confirmation of CRISIL’s sector forecast. Their disclosures do, however, illustrate why fuel exposure and mitigation plans matter alongside price increases.
Why the risk differs from one cement stock to another
A sector-wide cost forecast cannot establish which company will be most affected. A useful comparison should align the same reporting period and examine:
- Fuel and power costs per tonne, fuel mix and any hedging.
- Realized cement prices, product mix and sales channels.
- Volume growth and exposure to regional demand.
- Freight, diesel and currency exposure.
- Mitigation investments, including renewable power and logistics changes.
- EBITDA per tonne, operating margin, capacity additions and balance-sheet costs.
The available company disclosures do not provide a complete, same-period comparison across cement producers, so they do not support a definitive peer ranking.
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Margin forecasts are relevant to earnings expectations, but they are not stock-price forecasts. Whether a share price falls also depends on what investors have already priced in, company-specific exposure and execution, later input costs and results, and valuation. The cited outlooks establish a near-term operating risk; they do not establish an October 2026 valuation-based buy, sell or underperformance call for a defined group of Indian cement stocks. Motilal Oswal’s April sector note likewise treated the sustainability of announced price increases as important to earnings, an analyst view tied to that period rather than an official sector statistic.
International examples are not India forecasts
Company disclosures from other markets show how pricing, hedging and contracts can affect cost pass-through, but their numbers should not be applied to Indian producers.
- France-based Vicat reported first-half 2026 energy costs up 11.6%, largely due to higher volumes, and transport fuel costs up 27.3% to €45 million. It said hedging moderated energy-cost increases excluding volume effects, while price increases and contractual indexation offset much of transport fuel inflation. These are Vicat group results, not Indian industry figures. Vicat’s first-half 2026 results
- North American producer Amrize said fuel surcharges and pricing were expected to partly offset freight and diesel inflation, with price-cost improvement expected in the second half. This is company guidance for its market, not an India forecast. Amrize’s Q2 2026 presentation
- Sri Lanka’s Tokyo Cement described short-term margin pressure from fuel, energy, raw-material and freight costs in its FY2026/27 outlook. This is a separate market example. Tokyo Cement’s FY2026/27 outlook
How to read the outlook as it changes
CRISIL’s estimate is an April 2026 forecast, while ACC and Ambuja’s disclosures are company results and guidance released in April and May 2026. Actual margins can diverge as fuel prices, demand, monsoon conditions, price realization and mitigation change. To assess whether the risk is easing, compare later company results with the same indicators—fuel and power cost, realized prices, volumes and margins—rather than treating an earlier forecast as a realized outcome.
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