GST cut on cement will bring brighter prospects for industry: Nuvama

New Delhi [India], September 5 (ANI): The reduction in GST on cement from 28 per cent to 18 per cent is expected to be a game-changer for the sector, according to a sector report by Nuvama Institutional Equities.

The sector received a major boost with the announcement of reducing GST on cement from 28 per cent to 18 per cent. Nuvama report says it will lower consumer costs and improve affordability in the near term.

"In the near term, we forecast most benefits from price cuts shall be passed on to consumer" noted the report.

The report also adds that this will limit the scope of any price hikes in the short term.

"Given cement demand is largely inelastic with reference to prices, we do not foresee any material uptick in demand due to these cuts"

It adds the real advantage lies in the medium term, where better affordability can accelerate premiumisation and strengthen market share for big players.

The report says cement demand was subdued across all regions in August. The eastern market saw a hike of Rs 10-12 per bag, but dealers expect a rollback when the GST cut kicks in. In the south, where festive season and monsoon weighed on consumption, companies are attempting a Rs 30 per bag hike, though this too may not hold.

The northern and western regions reported steady prices with no major hikes planned, while central India is considering an increase of Rs 15-20 per bag. "Overall demand is expected to remain soft in September due to continued heavy rains and floods in some states," the report noted.

Despite current headwinds, the report expressed confidence in the sector's medium-term growth trajectory. "We believe volumes and prices will both see a superior performance year-on-year in FY26, aided by a low base of FY25," it said.

The brokerage expects companies to gradually raise prices around Q1FY27 as the market stabilises post GST cut, paving the way for a stronger pricing environment. (ANI)

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