Ambuja Cements, ACC and other cement stocks surge up to 4% after GST slashed from 28% to 18%

Cement stocks like Ambuja Cements, ACC Ltd, and others surged up to 4% on Thursday, September 4, after the GST Council announced a sharp reduction in Goods and Services Tax (GST) on cement from 28% to 18%.

Cement counters participated in the broader market rally, buoyed by expectations of robust demand and increased infrastructure spending. Ambuja Cements shares climbed 3.8% to Rs 595.65, while ACC Ltd shares advanced 2.4% to Rs 1,886.85.

Meanwhile, UltraTech Cement gained 3%, closing at Rs 13,101.80, and Shree Cement added 2.75%, ending the day at Rs 30,745.

The move, part of the Council’s broader tax rationalization drive, is expected to provide a significant boost to infrastructure and construction activity, while also easing input costs across the real estate and industrial segments.

The rate cut will come into effect on September 22, 2025, and applies to all major categories of cement, including Portland cement, aluminous cement, slag cement, super sulphate cement, and similar hydraulic cements, whether coloured or in clinker form. These products, previously taxed under the highest slab of 28%, will now fall under the 18% bracket.

Shares of leading cement companies such as UltraTech Cement, Ambuja Cements, and ACC are expected to be in the spotlight as markets open, with the tax reduction anticipated to positively impact demand elasticity and sector profitability.

The reduced tax burden could lead to a cut in retail cement prices, spurring higher offtake from both retail and institutional buyers.

The cement sector has long lobbied for a GST rate cut, citing its critical role in national infrastructure development. As one of the largest consumers of energy and raw materials, the industry has been significantly affected by the high tax burden, which kept prices elevated and squeezed margins. The shift to 18% is, therefore, likely to be seen as both a policy support signal and a margin lever.

The announcement comes amid a broader overhaul of the GST structure, in which the Council, led by Finance Minister Nirmala Sitharaman, scrapped the 12% and 28% slabs, retaining only the 5% and 18% slabs for most goods. Cement’s reclassification into the lower slab marks a key milestone in aligning core industrial inputs with the government's broader tax simplification goals.

The GST Council’s decision aligns with the government’s “next-generation GST reform” agenda, announced by Prime Minister Narendra Modi on August 15, aimed at making the tax regime more efficient, equitable, and growth-oriented.

With real estate, infrastructure, and affordable housing projects all set to benefit from lower cement costs, the mood across cement counters is likely to reflect both fundamental and sentiment-driven buying.

Brokerage View

Global brokerage firm Jefferies has termed the GST rate cut on cement from 28% to 18% as a strong positive for the sector, calling it a long-awaited move that could structurally improve industry dynamics.

While it doesn’t expect a major surge in demand purely due to price elasticity, Jefferies believes the new rate regime could aid pricing discipline and support profitability in the medium term.

The brokerage also highlighted that companies will now be able to claim full input tax credit on coal, a key raw material, as the GST on coal has been increased to 18% from 5%.

This alignment of input and output tax rates will also help release working capital, offering further financial flexibility to cement manufacturers. Although Jefferies pointed out a minor negative—a likely hit to SGST-linked incentive income for some companies—it emphasised that the overall impact remains clearly favourable.

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