UltraTech, ACC, Shree Cement surge up to 5%. Should you buy, hold or sell?

Business Standard

2 days ago

Cements companies shares price today
Shares of cement manufacturers rallied up to 5 per cent on the BSE in Monday's intra-day trade as media reports suggested that the goods and service tax (GST) rate on cement was likely to be revised down from the current 28 per cent to 18 per cent.
Shares of UltraTech Cement (₹2,392) and JK Cement (₹7,335) rallied 5 per cent each, hitting their respective record highs in intra-day trade. Shares of Dalmia Bharat hit a 52-week high of ₹2,392, and also surged 5 per cent in intra-day deals.
ACC, Ambuja Cements, JK Lakshmi Cement and Shree Cement were among other notable cement shares gaining between 3 per cent and 5 per cent. In comparison, the BSE Sensex was up 1.3 per cent at 81,602 at 10:35 AM.
What's driving cement shares today?
A sharp upward movement in cement stocks is being fueled by the announcement of changes in the GST regime by Prime Minister Narendra Modi. In addition, procedural simplification and streamlining measures are proposed to enhance ease of business and encourage wider compliance. The central government has proposed that most goods be subsumed in the 5 per cent and 18 per cent GST slabs vs. the existing 5 per cent/12 per cent/18 per cent/28 per cent.
Brokerages view on cement sector
GST rate on Cement has, ever since the introduction of the GST regime, been held at 28 per cent while other construction inputs like metals, tiles etc carry a rate of 18 per cent. While it is still not certain, there is a potential possibility that Cement may be moved to the 18 per cent bracket, according to analysts at Choice Equity Broking.
A 10 per cent cut in GST will lower the cost burden on end consumers of cement, assuming the GST rate cut is immediately passed on to consumers. Affordable cement is set to fuel demand for housing and infrastructure, aligning with the government's Housing for All, Smart Cities, and infrastructure vision. This structural boost is expected to accelerate cement demand, with volume growth rising from 8–9 per cent earlier to ~8-10 per cent pa, unlocking a strong growth runway for cement companies across the board, which will result in higher volume, the brokerage firm said.
Analysts at ICICI Securities view the potential rate cut as a sentimental booster for the sector given it may help perk up industry margins. It may be noted that every 1 per cent change in realisation has ~3-5 per cent impact on earnings before interest, taxes, depreciation, amortization (EBITDA).
Of course (post the formal announcement) the industry will have to immediately pass on the rate cut benefit to consumers, however, overtime, we expect the prices to inch up determined by market dynamics and our hypothesis of material reduction in industry-wide competitive intensity, the brokerage firm said, adding UltraTech Cement is their top pick.
Meanwhile, Axis Securities expects cement demand to remain strong in FY26, supported by infrastructure spending, steady housing demand, and rural consumption recovery. The sector is expected to see high single-digit volume growth, with ~40 mtpa of new capacity additions in FY26 following 30–35 mtpa in FY25, reflecting confidence in long-term demand. The brokerage firm sees long-term demand growth outpacing supply despite ongoing capacity additions. Key factors to watch include cement price trends, regional demand-supply balances, and movements in fuel costs.
The Union Budget 2025–26, core to the vision of Viksit Bharat@2047, has allocated ₹11.21 trillion for the infrastructure sector, providing further tailwind to demand for cement. The outlook for 2025–26 is therefore optimistic, with the cement industry expected to grow by around 8 per cent, UltraTech Cement said in its FY25 annual report.