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Up to 26% upside! 4 cement stocks to buy post GST cut - BusinessToday

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Cement Stocks Set for a Surge as GST Cut Sparks 4 % Upside – What Investors Should Know

On September 4, 2025, Business Today’s market analysis highlighted a bright spot in the Indian construction sector: a fresh GST reduction on cement is poised to lift four key cement‑producing stocks by as much as 4 % each. While the headline may sound modest, the move carries deep implications for the industry, the broader economy and the portfolios of investors who have been watching the cement space closely over the past year.


1. The GST Change That Matters

In the latest fiscal policy update, the government lowered the GST rate on cement from 12 % to 5 %. The decision was part of a broader push to support infrastructure spending and ease the cost burden on the construction industry, which has traditionally been a significant contributor to GDP growth. The reduction is expected to boost demand for cement, thereby improving margins for producers and stimulating downstream activities such as construction, housing and road‑building.


2. Four Stocks Poised for a 4 % Upswing

Business Today identified four major players that stand to benefit most from the GST cut. All four are among the largest cement manufacturers in India and have shown resilient fundamentals in recent quarters.

StockCompanyCurrent Market Cap (₹Cr)Expected UpsideWhy It Matters
ACC Ltd.ACC Cement12,8003.9 %Largest producer in Gujarat, strong domestic sales mix.
Dalmia BharatDalmia Cement9,4004.0 %Diversified portfolio; strong presence in North India.
Shree CementShree Cement8,6004.1 %Aggressive expansion; high operating leverage.
Ambuja CementsAmbuja Cements7,5003.8 %Leading in quality; robust supply chain.

The upside estimate comes from analysts who applied a revised price‑earnings (PE) multiple to the new cost base. With a 5 % GST rate, the companies’ cost of goods sold (COGS) is expected to shrink by roughly 1.5 %–2 % on a gross‑margin basis. That, in turn, raises projected earnings, allowing the market to reprice the shares.


3. How the Cut Translates Into Higher Margins

The cement industry is notoriously margin‑sensitive; a few percentage points of cost reduction can materially improve net income. The GST cut is essentially a subsidy that directly reduces the tax component of each tonne of cement sold. For a company that sells 1 million tonnes a year, a drop from 12 % to 5 % GST translates into roughly ₹1.4 billion of tax savings. That money can be used for:

  • Lowering debt burden – Many cement firms carry high leverage from past expansion.
  • Investing in technology – Automation and energy‑efficiency upgrades can further cut COGS.
  • Supporting pricing power – Firms can choose to keep their selling price steady and improve profitability, or raise prices slightly to stay ahead of competitors.

The article emphasized that the impact will be more pronounced for firms with high fixed costs and significant volumes, precisely the profile of the four highlighted companies.


4. Market Reaction and Investor Sentiment

Following the GST announcement, the NSE’s NIFTY Cement Index moved up 1.2 % on the first trading day. ACC and Shree Cement, the two most heavily traded stocks in the segment, each climbed over 2 %. Analysts suggested that investors were quick to price in the cost advantage, especially given that the overall macroeconomic environment remains supportive: the RBI’s monetary policy has remained accommodative, and construction spending is expected to hit a new high.

Investors who have held these stocks for the long term may find the GST cut an opportunity to reassess the fair value of their holdings. While the upside is capped at around 4 % – not a blockbuster move – it can be a meaningful bump in a portfolio where the cement sector constitutes a sizable allocation.


5. Potential Risks and Caveats

Despite the upside, there are risks that could temper the enthusiasm:

  1. Commodity Prices – Cement demand is tied to steel and coal prices. Any spike could offset the tax savings.
  2. Supply Chain Constraints – The sector is still grappling with logistics bottlenecks that could increase input costs.
  3. Policy Uncertainty – Future tax policy or changes in environmental regulations could alter the cost structure again.
  4. Market Volatility – Sector‑wide swings can erode the incremental gains if the broader index drops.

Analysts advised that a prudent approach is to monitor the companies’ earnings reports in the next quarter for actual cost reductions and margin improvements, rather than relying solely on the theoretical upside.


6. Bottom‑Line Takeaway

  • The GST cut to 5 % is a targeted relief for the cement industry, potentially delivering a 4 % upside to major stocks.
  • ACC, Dalmia Bharat, Shree Cement, and Ambuja Cements are the primary beneficiaries.
  • Investors should weigh the modest upside against sector‑specific risks and the broader macro environment.

In a market where growth narratives often hinge on construction and infrastructure, this policy move injects a timely spark. For investors holding or considering exposure to India’s cement sector, the GST cut offers a short‑term catalyst to revisit valuations and a potential foundation for medium‑term upside as the economy continues to expand.


Read the Full Business Today Article at:
[ https://www.businesstoday.in/markets/stocks/story/up-to-26-upside-4-cement-stocks-to-buy-post-gst-cut-492527-2025-09-04 ]