Stocks of cement makers such as UltraTech Cement, Shree Cement, Ramco Cements, Ambuja Cements and Dalmia Bharat rose 1%-3.3% after CLSA said the sector was likely to see margin expansion from pricing discipline, cost saving initiatives and the recent tax cuts.
CLSA upgraded its rating on three companies and maintained its coverage on two.
UltraTech Cement’s rating was upgraded from "accumulate" to "high conviction outperform," with the price target raised by 9% to Rs 14,700 per share from Rs 13,500.
Ramco Cements received an upgrade from "reduce" to "hold," with a new target price of Rs 1,045 per share.
CLSA kept its "outperform" rating on both Ambuja Cements and Dalmia Bharat, maintaining price targets of Rs 670 and Rs 2,650 per share, respectively.
Shree Cement was also upgraded from "hold" to "outperform," with its price target increased by 5% to Rs 33,500 from Rs 31,900 per share.
According to CLSA, the outlook for cement stocks has become more positive due to expectations of higher profitability, supported by pricing discipline and the removal of the coal cess.
UltraTech Cement is seen as the top beneficiary, thanks to its cost-efficiency strategies and plans for organic capacity expansion.
CLSA's note comes a day after HSBC said it is bullish on India's cement sector and has picked five stocks from the sector while raising target price by up to 45% and upgraded two of them.
Recent major deals in the Indian cement sector has accelerated the pace of consolidation and will likely drive prices, analysts at HSBC said.
HSBC said top four firms in the sector -- UltraTech, Ambuja Cements, Dalmia Bharat, Shree Cement -- now have combined market share of 57%, adding that the top four will likely dominate capacity additions in FY26, which will peak in the fiscal.
HSBC expects demand recovery in the sector from the second half of FY26 as government spending will likely boost annual demand growth and sees rise in prices from November onwards.
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