Cement company stocks gained in early trading after a report that the finance minister would examine the possibility of reducing the 28 percent goods and services tax rate for the sector.
The minister hinted at the reduction in the GST rate on cement at a post-budget meeting with Confederation of Indian Industry leaders and indicated that it would be considered for reference to the GST fitment committee if necessary, the Financial Express reported.
However, most cement stocks came off their day’s high in later trading. ACC down 1.25 percent, Ambuja up 0.66 percent, Ultratech Cement up 1.8 percent and Shree Cement down 1.2 percent.
Rakesh Arora, managing partner of Go India Advisors, said a reduction of the GST rate on cement would be positive for the sector. However, he was sceptical about cement companies passing on the benefit to consumers, saying they may retain a part of it to boost margins.
Most cement companies did not report positive results for the quarter ended December. UltraTech Cement said on its earnings call that it doesn't anticipate significant changes in cement prices. The company indicated that it doesn't expect pet coke prices to decrease significantly and energy prices will remain volatile.
The cement and steel sectors are expected to gain from the 33 percent increase in capital investment outlay to Rs 10 lakh crore in the budget for FY24. Additionally, there was a proposal for a 66 percent higher outlay for the Pradhan Mantri Awas Yojana, the affordable housing project for the poor, at over Rs 79,000 crore.
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