Impact Of GST Rate Cut On Cement Sector — Read Yes Securities' Thematic View

Yes Securities believes, whether it is cement, paint, or sanitary fittings, the consumer will ultimately save the money rather than spend it on additional or unplanned construction..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Yes Securities Report.Theme IThe TACC (total average construction cost) for a 500 sq. ft. IHB (including tier 1, tier 2, and Rural) post-GST rate cut is likely to fetch ~Rs 17,400 in construction cost savings for consumers. The major construction costs currently taxed under the 28% GST slab are Cement (~12% of TACC), Paint (~12% of TACC), and Sanitary Fittings (~6% of TACC), which together are likely to provide ~Rs 35/sq. ft. of cost relief to consumers if the GST rate is reduced to 18%. The question, however, is whether the consumer will be the real beneficiary of these savings or if there will be any shift. .Consumer behavior:No over-purchasing: In construction, cement is a basic and essential raw material, followed by paint and sanitary fittings. A house builder will purchase only the required quantity (e.g., ~225 bags for 500 sq. ft.), not more, even if GST is reduced. Cement is a commodity; a lower GST rate will not lead to consumers buying excess volumes..No expansion of planned layout: For instance, if someone has a planned layout of 1,200 sq. ft., they will not extend the area just because of a GST rate cut. “Hence we believe, whether it is cement, paint, or sanitary fittings, the consumer will ultimately save the money rather than spend it on additional or unplanned construction.”.Click on the attachment to read the full report:.Phoenix Mills Gets 'Buy' Upgrade From Motilal Oswal, Sees 35% Potential Upside — Check Target Price.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Impact Of GST Rate Cut On Cement Sector — Read Yes Securities' Thematic View

Major construction costs currently taxed under the 28% GST slab are cement, paint, sanitary fittings, which together can provide ~Rs 35/sqft of cost relief to consumers if GST rate is reduced to 18%.

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