The Indian cement market is showing signs of shifting towards a higher-priced structure, driven by GST restructuring and a gradual move by customers toward better-quality products. According to a Nomura report, Category A cement is expected to gain market share at the expense of lower-cost Category C players.
GST cut may boost demand for premium cement products
The GST Council will meet on September 3–4 to decide on a two-rate GST system. Cement, which is currently taxed at 28 per cent, is likely to move to the 18 per cent bracket.
According to the report, India’s cement industry is divided into four pricing segments — Premium, Category A, B and C. While Premium commands up to Rs 50 per bag higher than Category A, the gap between A, B and C is about Rs 25–30 per bag.
The brokerage house believes that this tax cut will make premium and Category A cement more affordable. “Category A accounts for around 40 per cent of volumes now. The GST cut could lift this to 55–60 per cent by FY30,” the report said.
Furthermore, the brokerage expects pan-India players like Ultratech and Ambuja to gain the most, as demand rises for their premium offerings, including Ultratech Weather Plus and ACC Gold, across various markets.
Cement companies may hike price before GST decision
Nomura in its report noted that dealers in West Bengal have already announced Rs 11 per bag price increase to offset recent corrections. The brokerage added that dealers across India could raise prices by an additional Rs 20–30 per bag in the last week of August, ahead of the GST rate cut decision.
Nomura, however, cautioned that such pre-GST price hikes could draw attention from tax authorities. If implemented, these increases may provide support to companies like Dalmia Bharat and Nuvoco.
Shree Cement narrows price gap with Category A
The report also highlighted that Category B players, particularly Shree Cement, are narrowing the price gap with Category A. Shree, which historically followed a volume-driven strategy, is now focusing on improving realisations through branding and marketing.
Dealer checks indicate that Shree Cement has narrowed the price gap with Category A cement in North India to around Rs 15 per bag, down from Rs 25–30 earlier. In the East, the gap has reduced to Rs 20 per bag from Rs 35. Together, these two regions contribute more than 80 per cent of Shree Cement ‘s volumes.
Category C players losing ground
Category C cement makers are finding it difficult to hold volumes in states such as Kerala, Rajasthan and West Bengal. They had a sizeable market when Category A cement was selling at Rs 380–400 per bag, but with falling regional prices, Category C players have lost share to higher-category competitors.
“Even at higher prices, customers prefer Category A and B products,” dealers told Nomura. This is positive for Ramco, Ultratech and Ambuja, which continue to expand their footprint in these regions.