Cement stocks were trading in the green on Wednesday, a day after Finance Minister Nirmala Sitharaman indicated that the government could consider a reduction in the goods and services tax on cement.
Cement stocks like India Cements (up 1.99%), UltraTech Cement (up 1.87%) Ramco Cements(up 1.53%) Heidelberg Cement India (up 1.97%) were in the green at 12:56 PM on Wednesday.
Nirmala Sitharaman at a session with the members of the Confederation of Indian Industry (CII) in New Delhi, said that she would have the fitment committee look into the existing 28 per cent GST rate on cement, which is a critical input in the construction of everything from houses to bridges.
Feedback Ventures head and infra expert Vinayak Chatterjee made the recommendation. He said that the reduction if put into effect, will have an enormous elasticity impact on the government’s revenues and boost it further.
“On GST for cement, your point is taken. I will have the fitment committee look at it,” she told the industry body members
According to global brokerage Jefferies, a reduction in GST from 28% to 18% would imply a 7-8% cut in customer pricing. In addition, it will provide a minor boost to volumes and is positive for pricing in the medium term.
The bottom line of cement companies took a hit on account of higher fuel costs in 2022, but analysts expect that to change this year. The demand for cement is expected to increase over the next few quarters on account of the robust Union Budget and the upcoming elections.
Written by Simran Bafna
