New delhi, Oct. 11 -- In a knee-jerk reaction to corporate tax cuts, cement stocks rallied as investors anticipated increased savings and a consequent boost to earnings.
However, analysts say that some cement producers are likely to be better off sticking to the old regime. "Interactions with industry experts suggest: MAT, or low-effective-tax-rate, paying companies are unlikely to opt for the new regime as current tax/holiday benefits they enjoy are higher," Edelweiss Securities Ltd said in a report on 25 September. MAT stands for minimum alternative tax.
For instance, Shree Cement Ltd's current effective tax rate (net of exemptions/incentives) is less than the revised tax rate of 25%, so it may not migrate to the new regime right away. ...