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The trajectory of infrastructure capex, potential price hikes, and rising input costs will be key to cement stocks in the near term, even as May demand stayed sluggish across most regions, according to Nuvama.
Geopolitical volatility poses near-term risks to housing demand and profitability, while cost headwinds from petcoke and packaging are set to pressure margins into Q2FY27. Cement demand remained sluggish in May 2026 due to labour shortages and unfavourable weather conditions in most regions, Nuvama said. The western region was the exception, reporting an improvement in demand during the month. West Bengal continued to see sluggish demand due to the impact of state elections, while Bihar posted a slight recovery but faced supply constraints from raw material shortages and unseasonal rainfall. The southern region reported sluggish demand led by labour shortages tied to state elections and unseasonal rains. Northern region demand was muted on labour shortages, while the central region saw a slight improvement. Price hikes anticipated in May were not implemented in most regions on account of weak demand, Nuvama noted. However, the hikes taken earlier in April have sustained. In Bihar, prices increased by Rs 5-10/bag in May, supported by improved demand and constrained supply. Prices in West Bengal, the south, north and central regions remained largely stable after April's increases. The brokerage added that the dealers are now expecting price hikes of INR10/bag in June across the northern, central and western regions. In the south, expected hikes of INR10/bag in the non-trade segment were not implemented in May. Rising petcoke and packaging costs remain key cost headwinds. Petcoke prices have decreased slightly from the recent peak to USD151/t, but are still up USD25/t QoQ, Nuvama said. The impact of elevated fuel costs is likely to be reflected starting late-Q1FY27/Q2FY27. "Geopolitical issues, which can affect sentiments and hence housing demand going ahead, trajectory of infra capex and rising costs, which can impact margins adversely, are likely to determine stock prices in the near term," the brokerage said. With demand visibility still mixed and input costs elevated, the sustainability of future price hikes and the pace of housing and infra spends will be critical for cement sector profitability in coming quarters. (ANI)
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