GST impact : Cement stocks to watch out for

With Rajya Sabha creating history on August 3 by passing the critical GST bill investors should not miss out on the opportunity of accumulating stocks that will benefit from the historic move.

GST bill will have an overall positive impact on the economy and hence broader markets may cheer the GST bill and its impact on doing business in India. However there are few sectors that will surely benefit more than others.

Cement sector is one such sector that is sure to gain from the clearance of the bill. Currently the tax on Cement ranges from 27 per cent to 32 per cent. The GST rate is expected to be much lower than the current indirect tax rate.

Apart from the savings in the form of lower tax rates, the logistics and transportation cost is expected to come down considerably for the cement companies which in turn will lead to further savings. Currently the transportation costs for the cement companies range between 20 – 25 per cent of the total revenue. There is an estimate that the logistics cost may come down by almost 30 per cent once the GST bill gets implemented. Rationalisation in warehouses is also expected, which will further help cement companies.

Ultratech Cement and Shree Cement will be some of the biggest beneficiaries in the cement sector due to GST implementation.