Cement stocks rally as GST cut to 18% boosts demand outlook; UltraTech, Ambuja, Shree Cement in focus
- 4th September 2025
- 02:00:00 PM
- 3 min read
Summary
Cement stocks surged after the GST Council cut the tax rate on cement from 28% to 18%, sparking hopes of lower construction costs and stronger housing demand. UltraTech Cement, Ambuja Cements and Shree Cement led the rally. PL Capital’s Swarnendu Bhushan, said the rate cut is a “direct demand booster” and could re-rate the sector, with UltraTech, Shree Cement and Dalmia Bharat among PL’s top BUY calls.
Mumbai | September 4 -Cement stocks jumped on Thursday after the GST Council cut the tax rate on cement to 18% from 28%, a long-awaited relief for the sector. The move is expected to reduce construction costs, improve housing affordability and support India’s infrastructure push.
“The cut to 18% will meaningfully reduce costs for developers and improve affordability for buyers. We see this as a direct demand booster at a time when infrastructure activity is already accelerating,” said Swarnendu Bhushan, Co-Head of Research at PL Capital, after the GST Council slashed the tax rate on cement from 28% to 18%.
GST cut sparks cement rally
The GST Council simplified the tax structure into two slabs — 5% and 18% — while retaining a 40% bracket for high-end cars, tobacco and cigarettes. Cement, taxed under the steep 28% slab since 2017, is now brought down to 18%.
The rate cut fuelled a rally in cement stocks: As on 9:30 am
- UltraTech Cement gained 2.5% to ₹13,038
- Ambuja Cements jumped 3.4% to ₹593
- ACC Ltd advanced 1.3% to ₹1,872
- Shree Cement climbed 1.5% to ₹30,525
- JK Cement and Ramco Cements also traded higher.
So far in 2025, UltraTech shares have gained 12%, backed by a 49% YoY rise in Q1FY26 profit to ₹2,226 crore. Ambuja Cements has risen 8.7%, while ACC has declined 9.3%.
Also Read: GST 2.0 Leaves Gold, Silver Jewellery Untouched at 3% Amid Wider Tax Cuts
Boost to housing and infra demand
Bhushan said the tax reduction is a long-awaited relief that strengthens sector fundamentals. “Cement is a cornerstone of India’s housing and infra growth. The GST cut comes at the right time, improving project viability for developers and affordability for buyers,” he noted.
PL Capital expects the strongest impact in affordable housing and rural markets, where demand is highly price-sensitive. Infrastructure projects are also expected to benefit from lower input costs, supporting volume growth in FY26.
UltraTech, Ambuja, Shree Cement in spotlight
Large-scale producers with integrated operations are best positioned to capitalise on the demand revival, Bhushan added.
“Near-term earnings visibility improves with the tax cut. UltraTech and Shree Cement remain our top picks, while Ambuja is well-placed under the Adani Group’s expansion strategy,” he said.
PL Capital has outlined its preferred cement stocks post the GST cut, with updated ratings and target prices:
- UltraTech Cement – BUY, TP ₹14,200 | Scale leader, strong earnings visibility.
- Shree Cement – BUY, TP ₹33,500 | Cost-efficient, robust expansion pipeline.
- Ambuja Cements – ACCUMULATE, TP ₹640 | Adani-backed, capex cycle underway.
- ACC Ltd – HOLD, TP ₹1,950 | Margin recovery play, synergy with Ambuja.
- JK Cement – ACCUMULATE, TP ₹7,200 | Solid demand visibility in North & West India.
- Ramco Cements – HOLD, TP ₹1,150 | Stable play in South India.
- Dalmia Bharat – BUY, TP ₹2,700 | Aggressive expansion, pan-India presence.
- India Cements – REDUCE, TP ₹215 | Weak balance sheet caps upside potential.
- Orient Cement – ACCUMULATE, TP ₹240 | Rural housing demand to drive volumes.
- Birla Corp – HOLD, TP ₹1,650 | Steady demand outlook in Central India.
Outlook for investors
The GST cut is expected to add 100–150 basis points to sectoral demand growth in FY26. Combined with softening fuel costs and sustained government infra spending, the outlook for cement earnings has turned more constructive.
“While the GST cut is a structural positive, the sector’s sustainability will depend on volume growth and profitability. Cement remains a core long-term play on India’s infra and housing cycle,” Bhushan said.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
