GST cut to lift cement demand, margins; UltraTech, Nuvoco among top picks

As a part of the major Goods and Services Tax (GST) reforms, the GST Council has approved a reduction in rates on cement from 28 per cent to 18 per cent, effective September 22, 2025. Analysts expect the move to lower cement prices by ₹25-30 per bag, and position the industry favorably to enhance net realisations and margins over the medium to long term. 

 

Shares of cement companies like UltraTech Cement, Ambuja Cements, ACC, and Shree Cement rose up to 3 per cent during intraday trade on Thursday. However, later in the session, the stocks were trading mixed as the broader market slipped from the day’s highs.

 

 

Brokerages on GST cut for cement sector

According to analysts at domestic brokerage JM Financial, the move is structurally positive over the medium to long term, supported by gradually improving demand and the industry’s ability to sustain price hikes. 

 

However, near-term demand elasticity is expected to remain limited. Dealers are likely to keep inventory levels low in the run-up to the revised GST rate implementation on September 22. 

 

Additionally, the GST reduction will help ease working capital lock-ups, particularly in non-trade sales (25–30 per cent of industry volumes) and across channel partners, thereby improving liquidity in the value chain. The removal of the Clean Energy Cess (₹400 per tonne) is a positive, especially for Central and East India–based players with higher coal reliance.

 

The brokerage has a 'Buy' rating on Ambuja Cements, Birla Corporation, JK Cement and Ultratech. While it maintains a 'Hold' on ACC, Dalmia Bharat, Ramco Cements, Shree Cement, and Star Cement.

 

In an earlier report, Choice Institutional Equities estimated that cement industry demand could rise to around 8 per cent to 10 per cent in FY27/28, up from the current 6 per cent to 8 per cent range, if the 18 per cent GST rate is implemented. Additionally, the sector could see a pricing boost of ₹60–₹100 per ton during the same period.

 

The GST reduction can boost consumption, improve capacity utilisation, improve pricing power, and offer operating leverage benefits for the companies at varying degrees due to higher volumes, it said in a note.

 

The brokerage expects Ebitda per ton for cement companies under its coverage to rise by 15 per cent to 25 per cent in FY27/28, driven by stronger demand and improved pricing. In percentage terms, ACC, Birla Corp (BCORP), JK Lakshmi Cement (JKLC), and Nuvoco Vistas are expected to be the top beneficiaries. The brokerage maintains a positive view on the sector, with Nuvoco and JKLC as its top picks. It currently has a Buy on JK Lakshami and Nuvoco Vistas with a target price of ₹1,175 and ₹480, respectively.