Ultratech, Shree Cement Top Brokerage Picks As GST Relief, Pricing Stability Sets Stage For Margin Gains

India’s cement sector is back in the spotlight with brokerage firms turning bullish on profitability and margin outlook. They have cited a combination of pricing discipline, the removal of coal cess, and the recent GST cut from 28% to 18% for their improved confidence in this space.

Top players such as Ultratech Cement, Shree Cements, JK Cements and Ramco have been picked as preferred bets. 

CLSA Betting Big On Cement 

Brokerage firm CLSA upgraded UltraTech Cement’s stock to a “high conviction outperform” from “accumulate” and increased its target price by 8.9% to ₹14,700 from ₹13,500.

Shree Cement was also upgraded to “outperform” from “hold,” with its price target increased to ₹33,500.

Ramco Cements was revised to “hold” from “reduce,” with a target price of ₹1,045, while the brokerage maintained its “outperform” rating on Ambuja Cements and Dalmia Bharat, with targets of ₹670 and ₹2,650 per share, respectively.

CLSA added that UltraTech remains its preferred pick, given its cost optimization efforts and ongoing capacity expansion, which position it to deliver stronger growth compared to peers.

Antique Stock Broking On The Sector

Antique Stock Broking flagged UltraTech Cement, Shree Cement, and JK Cement as its preferred picks.

The brokerage noted the cement industry’s low single-digit demand growth in July and August due to heavy monsoons, festive holidays, and modest government spending in some regions.

The West and Central markets posted relatively stronger growth on a low base, while demand in the North, South, and East was subdued due to flash floods, monsoon-related weakness, and delayed capex.

Despite the seasonal slowdown, cement prices largely held steady. Pan-India prices fell 1.7% sequentially in Q2 so far, led by a ₹5 - ₹10 per bag decline in the South and East. However, prices remain 6 - 7% higher on a low base.

The recent cut in GST on cement from 28% to 18% is seen as a medium-term profitability driver. While prices may initially decline by ₹20 - ₹30 per bag, companies could retain part of the benefit, the brokerage added.

Stock Watch

Cement stocks saw mixed movement on Wednesday. Among the gainers, UltraTech Cement rose 1.14% to ₹12,721, while Ambuja Cement advanced 1.64% to ₹583.05.

JK Cement climbed 1.17% to ₹6,767, Dalmia Bharat gained 1.68% to ₹2,468.70, and Ramco Cements was the top gainer with a 2.59% rise to ₹1,066.90.

On the other hand, ACC slipped 0.49% to ₹1,856.80, JSW Cement declined 0.63% to ₹147.77, and Star Cement edged down 0.31% to ₹271.70. 

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