GST reforms to boost operating profit of cement companies: Report

New Delhi: The reduction in Goods and Services Tax (GST) will boost the operating profit of cement companies by Rs 100-150 per metric tonne (MT), a report said on Tuesday. The government move will also reduce overall construction expenses in rural housing by 0.8-1 per cent, boosting volumes and supporting enhanced capacity addition.

Backed by the healthy cement demand, average cement realisation (ex-factory price excluding GST) is expected to rise by 3-5 per cent in FY26, even as the input prices are expected to remain range-bound, credit rating agency ICRA said in its report.

Further, Operating Profit Before Interest, Taxes, Depreciation, and Amortisation (OPBIDTA) is likely to improve by 12-18 per cent to Rs 900-950/MT in FY2026, it added. Cement volumes increased by 8.5 per cent in 5 months of FY26 due to strong demand from the housing and infrastructure segments, despite the early onset of the monsoons in a few regions. Cement prices have increased by 7.4 per cent in the first five months of the current fiscal on a year-on-year (YoY) basis, with major hikes in the northern and eastern regions.

The trajectory of input prices, especially for pet coke and freight, is linked to global crude, which remains exposed to geopolitical dynamics. With the recent GST rate cut from 28 per cent to 18 per cent expected to be passed on to customers, and the average retail price of cement currently ranging between Rs 350–360 per bag, consumers are projected to benefit by Rs 26–28 per bag, the report said.