Nuvama: Cement prices take a breather; GST cut positive, this stock in focus

Nuvama Institutional Equities said cement prices remained largely steady in August 2025 despite subdued demand across regions. Price hikes have been attempted in September in southern, eastern and central India, though their sustainability remains to be seen amid an upcoming GST reduction.

Heavy rains and floods are expected to keep demand soft in the near term. The domestic brokerage said the reduction of GST on cement from 28 per cent to 18 per cent is positive for the sector.

While it may limit near-term price hikes, it is expected to support prices and the premiumisation trend over the medium term. Volumes and prices in FY26E are likely to be superior year-on-year (YoY), and JK Cements Ltd's stock remains a top pick.

In the eastern region, demand was subdued in August and is likely to remain soft in September. A price hike of Rs 10–12 per bag was taken but may be reversed with GST changes. Southern demand was muted due to monsoon and festive season; a Rs 30 per bag hike is planned but expected to roll back.

Northern demand was hurt by floods; prices were steady, with no major changes expected. Central demand remained weak due to monsoon; Rs 15–20 per bag hikes are discussed but unlikely. Western demand was soft; prices steady, with no hikes announced.

Nuvama emphasised that the GST reduction is a welcome move for the industry. Most near-term benefits are expected to be passed to consumers, with gradual price increases likely around Q1 FY27.

Removal of the Rs 400/t coal compensation cess will marginally lower power and fuel costs. Better affordability may boost demand for premium products, aiding market share for leading players, with this stock well positioned, though some may see reduced SGST-linked incentives.