New Delhi [India], September 27 : Cement companies were strategically attempting to pocket the GST benefit intended for consumers, noted Yes Securities in its latest industry update.
The report noted that following the government's decision to reduce the GST on cement from 28 per cent to 18 per cent, effective September 22, expectations were high for a meaningful price reduction at the consumer level.
However, channel checks revealed that all-India average cement prices dropped by just Rs 5 per bag on both a month-on-month and quarter-on-quarter basis.
With the rate cut implemented late in the month, companies adopted a weighted average pricing approach; however, the muted price correction suggests limited pass-through, as manufacturers appeared to retain a significant portion of the tax benefit to safeguard margins amid monsoon disruptions and subdued demand.
"As per our channel checks, all-India average prices were down by Rs5/bag on both a MoM and QoQ basis. Effectively, companies were strategically trying to pocket the GST benefit that was meant for consumers. However, the net impact was relatively muted compared to the actual benefit," Yes Securities report added.
Ahead of the GST rate cut on cement, companies attempted a price hike from the last week of August to the second week of September. A few pockets were able to implement a hike of Rs10-15/bag in the last week of August, except Hyderabad, where prices rose by Rs30/bag in the first week of September.
Overall, the effective price hike during 1st-21st September was Rs 10/bag in some states in the eastern and western regions.
"Companies that took a price hike before the GST cut were able to pass it on to consumers, while the others remained at base price with 18 per cent GST," the report added.
On a QoQ basis, allIndia average prices were down by 1.3 per cent, led by a major decline in the southern region (2 per cent), followed by the western (1.5 per cent), eastern (1.3 per cent), and central (1.2 per cent) regions, while
prices in the northern region remained flattish.
"We also believe it is highly unlikely that any price hikes will occur in the next two months. However, our channel checks suggest that companies may attempt a hike post Diwali," the report added.
According to the report, on the demand front, the second quarter of Financial Year 2026 witnessed subdued demand due to the early monsoon impact, coupled with the festival season, no new construction on account of religious beliefs, sand mining issues, and some states being flooded due to continuous heavy rain.
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