Cement Stocks Rally on GST Cut and Strong Q2 Performance: Shree Cement and Dalmia Bharat Shine

Cement stocks have seen a significant uplift following the government's decision to reduce the Goods and Services Tax (GST) on this crucial construction input from 28% to 18%, effective September 22, 2025. Complementing this, the Reserve Bank of India (RBI) has implemented measures to lower interest rates and stimulate lending across the banking system, which is anticipated to boost demand for cement, especially during the current peak construction season.

Shree Cement reported strong standalone results for the September 2025 quarter, with net sales rising 15.5% year-on-year to Rs 4,303.2 crore. The company sold 8.1 million tonnes of cement, and its realisations increased by nearly 8.3% year-on-year. Despite the typically slower monsoon season, Shree Cement improved its realisations. Power and fuel costs fell by 2.5%, partly due to increased use of in-house renewable energy, which met 63% of its power needs. Consequently, its operating profit margin expanded by 330 basis points to 19.8%, and net profit surged by 197.8% to Rs 277.1 crore. The company is also expanding its capacity, commissioning a 3.65 million tonnes clinker line and expecting a 3 million tonnes cement mill shortly, with further expansion projects underway.

Dalmia Bharat also posted strong consolidated results, with revenue from operations growing 10.7% year-on-year to Rs 3,417 crore in the September 2025 quarter. It sold 6.9 million tonnes of cement, with realisations up 7.5%. Its operating profit margin grew by 770 basis points to 19.1%, aided by higher realisations which helped offset input cost increases. Dalmia Bharat's net profit jumped by 387.8% to Rs 239 crore. The company is also expanding its clinker capacity and expects its cement capacity to reach 55.5 million tonnes by FY27.

Both companies are trading at high valuations, indicating that significant growth is already factored into their stock prices.

Impact: The GST reduction, increased demand from a boosted lending environment, and strong operational performance coupled with capacity expansions are highly positive for cement manufacturers. This news is expected to positively influence the stock prices of major cement companies and the broader construction sector. Rating: 9/10

Heading: Difficult Terms and Their Meanings GST: Goods and Services Tax, a tax levied on the supply of goods and services. RBI: Reserve Bank of India, India's central bank responsible for monetary policy and banking regulation. Year-on-year (y-o-y): A comparison of financial data between two periods, one year apart. Basis points (bps): A unit of measure equal to one-hundredth of one percent (0.01%). 330 bps equals 3.30%. Clinker: A nodular material that is the intermediate product of cement manufacturing, which is then ground with gypsum to produce Portland cement. Commissioned: Put into operation or service. Integrated project plant: A manufacturing facility that combines multiple production processes at a single location. Return on Capital Employed (ROCE): A profitability ratio that measures how efficiently a company is using its capital to generate profits. P/E ratio: Price-to-Earnings ratio, a valuation metric used to compare a company's stock price to its earnings per share.