Cement stocks rally as Jefferies predicts recovery from H2FY25; Ultratech tops Nifty gainers

Jefferies predicts 8-10 percent volume growth in H2FY25

Cement stocks rallied on December 2, led by Ultratech Cement, which surged over 3 percent to top the Nifty 50 gainers list after Jefferies expressed optimism about a recovery for Indian cement companies in the second half of the fiscal year. Other players, including Shree Cement, India Cements, JK Lakshmi Cement, JK Cement, Andhra Cements, and ACC, also advanced by 2-3 percent.

Jefferies identified Ultratech Cement as its top pick among large-cap stocks and JK Cement as its mid-cap favorite, citing bottoming-out prices and an improving demand environment as key growth drivers.

"Demand growth has moderately improved in Oct-Nov, and recovery should continue into Q4 on revival in govt capex," the firm stated, penciling in 8-10 percent volume growth in H2FY25, compared to flat performance in H1FY25.

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Regionally, Northern India outperformed in November, with prices firming up due to restricted supply in Delhi following construction bans. Central India, including Lucknow and Bhopal, faced pricing pressures across construction materials. The Southern region was the exception, experiencing price declines driven by sluggish demand and heightened competition.

Individually, Ultratech Cement gained further traction after announcing the expansion of its Kukurdih unit’s production capacity from 2.7 MTPA to 3.3 MTPA through debottlenecking.

"As part of its ongoing capacity expansion programs, the company has identified an opportunity for debottlenecking at its integrated unit at Kukurdih, Chhattisgarh. The company’s total cement capacity has reached 156.66 mtpa, including its overseas capacity," the company said in an exchange filing.

Meanwhile, Prabhudas Lilladher echoed the positive sentiment, anticipating improved cement demand in H2FY25, fueled by government infrastructure spending, a strong monsoon bolstering the rural economy, and steady urban housing demand. The brokerage favored Ultratech Cement and ACC as its top picks in the sector.

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