Cement stocks rally on hopes of GST cut, brokerages see demand boost ahead

Cement sector cheers GST reform talk; affordability, demand revival in focus

Cement stocks were in full swing on August 18, with Ultratech Cement, JK Cement, ACC, Shree Cement, and others rallying as much as 5 percent after reports of potential changes in the Goods and Services Tax (GST) regime sparked optimism.

Currently, cement is taxed at 28 percent under GST, making it costlier compared to other construction inputs such as tiles and metals that fall under the 18 percent slab. According to Choice Broking, while there is no certainty yet, cement could soon be brought under the 18 percent bracket—a move that could be a game changer for the sector.

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A 10 percent cut in GST would directly reduce costs for end consumers, provided the benefit is passed on immediately. Analysts believe affordable cement would boost demand in both housing and infrastructure, in line with the government’s vision of Housing for All, Smart Cities, and large-scale infra expansion.

This structural demand push could take cement industry’s volume growth from the earlier 8–9 percent range to 8–10 percent annually, creating a strong growth runway for cement manufacturers.

ICICI Securities noted that a possible tax cut would act as a major sentiment booster for the sector. Every 1 percent change in realisations, it added, can swing EBITDA by nearly 3–5 percent, making a lower GST rate a significant earnings driver for cement companies.

Axis Securities, meanwhile, expects cement demand in FY26 to remain robust on the back of sustained infrastructure investments, healthy housing demand, and rural recovery. The brokerage projected high single-digit growth in volumes, with nearly 40 mtpa of new capacity set to be added in FY26, on top of 30–35 mtpa in FY25—reflecting long-term confidence in demand.

On August 15, the Centre proposed moving to a simplified GST structure standard and merit — with special rates reserved only for select items. The proposal was sent to the Group of Ministers, set up by the GST Council, and is part of a broader plan for next-generation GST reforms.

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