According to foreign brokerage firm Jefferies, a GST cut from 28 percent to 18 percent would imply 7-8 percent cut in customer pricing
Share prices of Ultratech Cement, Ambuja Cements, JK Cements, Ramco Cements gained between 1-2 per cent on February 8, a day after Finance Minister Nirmala Sitharaman indicated that the government could be open to considering a reduction in the goods and services tax (GST) on cement.
At a session with members of the Confederation of Indian Industry (CII) in New Delhi, she assured that she would have the fitment committee look into the existing 28 percent GST rate on cement.
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According to foreign brokerage firm Jefferies, a GST cut from 28 percent to 18 percent would imply 7-8 percent cut in customer pricing. It will provide minor fillip to volumes and is positive for pricing in medium term, it noted.
Cement companies took a hit to their bottomline on account of higher fuel costs in 2022, but that is expected to change this year, believe analysts.
Cement demand is expected to improve over next few quarters on account of robust Union Budget as well as upcoming elections, they added. “Hiked in capital expenditure by 33 percent YoY to 3.3 percent of the GDP in FY2024 is positive for cement demand growth,” said Kotak Institutional Equities.
