Stock Market today: UltraTech Cement, Ambuja Cements, ACC Ltd, Shree Cement Ltd among other gained up to 3% during the intraday trades on Thursday following GST council meeting outcome. The GST slab being reduced on Cement while is positive, however analysts still are watchful on demand recovery and price improvement, which remains soft in seasonally weak quarter. Not surprising the UltraTech Cement, Ambuja Cements, ACC, Shree Cement stocks gave up majority of gains and were trading only with marginal gains by noon.
GST Reforms Cement
On Wednesday, the Goods and Services Tax (GST) Council, led by Finance Minister Nirmala Sitharaman, reduced the Goods and Services tax rate on cement from 28% to 18%. This rationalisation of cement taxation is looked in positive light over the longer term and comes at a time when the sector is rapidly expanding capacity to meet anticipated demand growth. However in the near term the analysts and street is watchful on price hikes and demand pick up after the monsoon impacted JulySeptmeber quarter comes to an end.
Analysts views on GST reforms on cement
Emkay Global Financial Services taking views of industry experts says that speakers see negligible impact from the likely cut in GST rate to 18% (from 28%), owing to relatively inelastic cement demand. Consumption could slow down briefly, owing to higher channel inventory, although it will normalize in ensuing months on pent-up demand and a busy construction period in H2
Weak pricing a concern in current seasonally weak quarter
Cement prices, which had remained relatively stable during the previous three months despite the monsoon, experienced a significant drop in August, notably in the eastern region as per PL Capital channel checks. While companies were aiming to boost prices ahead of GST rationalization, dampened demand and upcoming festive season is likely to be unfavorable.
PL Capital anticipates that increased pet coke and gypsum costs will put pressure on Q2FY26 profitability of cement manufacturers . While demand is expected to improve post-monsoon, new capacities are adding to challenge on pricing sustainability. PL Capital awaits better entry into cement stocks.
Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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