Chadha told ET Now that there is “fair certainty” about the tax cut after the upcoming GST Council meeting. “Structurally, this will be positive for the sector. Customers may upgrade from lower-end brands to premium ones, while companies will have more room to gradually raise prices, boosting profitability,” he said.
No big demand jump expected, price hikes likely ahead
Despite the tax cut, Chadha does not expect a sudden rise in demand. “Cement demand is fairly inelastic to price changes. But leading brands such as UltraTech, Ambuja, and Shree Cement stand to benefit the most, as the sector gradually shifts towards premium brands. By FY30, these top players could account for 55–60% of volumes,” he added.
While the GST reduction could lower prices in the short term, Chadha believes stronger demand in the second half of the year will allow companies to raise prices. “Housing and infrastructure projects will drive volumes, and whenever demand is strong, the industry has shown it can sustain higher prices,” he said. Nomura expects a 4–6% annual price hike in FY26, along with 7–8% volume growth.
Consolidation to continue, but slowly
The cement industry has seen aggressive consolidation in recent years, with over 60 million tonnes of capacity changing hands in FY23–24. However, Chadha expects the pace to slow. “Most regions, except the south, are already dominated by the top three to six players. While there is still scope for acquisitions, targets are limited, so consolidation will be more gradual,” he explained.
With a tax cut on the horizon, premiumisation of demand, and the likelihood of steady price hikes, analysts believe the cement sector is set for a structural upgrade. The combination of policy support and demand tailwinds could improve profitability for India’s leading cement makers over the medium to long term.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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