Ambuja Cements, UltraTech Cement: What lies ahead for cement sector following GST rate rationalisation?

The new Goods and Services Tax (GST) rate will be effective from September 22.

Commenting on the move, industry players said the rationalisation of GST on cement -- a key construction material -- will help lower the capital cost of infrastructure projects and improve cash flows.

What experts say

A recent research report by India Ratings and Research (Ind-Ra) said that the GST rationalisation will bring down the prices of cement by ₹30-35 per 50 kg bag and lower the cost of construction.

The report said the revamp is a "structural positive" for the cement sector and could support demand in the affordable segment, which has been tepid in recent times.

Ind-Ra believes companies will likely largely pass on this benefit by reducing selling prices, which will help lower construction costs for infrastructure and housing projects.

"With the rate cut likely to be passed on due to high competition, cement prices for consumers would soften, while net realisations for cement companies may remain range-bound," it said.

However, Ind-Ra maintains its cement demand growth forecast at 5-7% year-on-year (YoY), as the demand pick-up across segments may not be immediate.

"The price reduction for consumers could also lead to some upgrading to higher-value brands, benefiting tier 1 players," it said.

Cement demand outlook

Indian cement demand, the report said, is likely to slow down to single-digit growth in the seasonally weak second quarter of FY26 as monsoon dampens construction activity.

After having a slow growth in FY25, the cement industry started this fiscal year with a 6-7% growth in the June quarter, driven by a healthy recovery in rural demand, supported by real wage growth and increased infrastructure spending.

Even in the second quarter, the industry had "a good start with 12% YoY volume growth in July 2025," it said.

"With monsoons dampening construction activity, net realisations are expected to decline sequentially over Q2 FY26, though they should remain higher YoY. Q1 FY26 marked the first instance of YoY increase in realisations since December 2023," it said.

Moreover, rural demand is expected to stay healthy, aided by an above-average monsoon and a fourth consecutive quarter of positive real wage growth.

"Conversely, urban demand is lagging, with new housing activity sluggish due to declining new launches in Q1 FY26. While rate cuts could bolster urban demand in 2H, growth is likely to be weaker than in rural areas," it said.

On capacity utilisation, Ind-Ra said the cement industry witnessed significant capacity additions in Q1 FY26, with around 17 million tonnes commissioned out of the 75 MT planned for the full year.

"Recent acquisitions and pending ramp-ups of underutilised assets by large players pushed industry-wide capacity utilisation to nearly 72 per cent, a marginal YoY decline," it said.

How cement shares have performed

Shares of Ambuja Cements have fallen 1.67% in the past five sessions, while UltraTech Cement has slipped 2.60% during the period (as of Thursday, September 11 close). ACC shares have gained 0.55% on the NSE, and Dalmia Bharat Ltd has remained flat with a negative bias.

Shree Cement has slipped 0.4% in the past five sessions.