Global brokerage firm CLSA expects demand for cement to slow down in 2024 but it also sees input costs coming down for the manufacturers. Factoring in these expectations, the firm has rolled out a slew of upgrades and downgrades for major cement players.
ACC and Ambuja Cements, the two Adani group cement stocks, have been downgraded to “underperform” and “sell”, respectively, even as CLSA raised their price targets to Rs 2,430 and Rs 490. The expansion plans of the two Adani firms would be keenly tracked in 2024, it said.
The brokerage expects the capacity expansion trend across the sector to remain strong in 2024.
The firm upgraded Shree Cements to “underperform” from “'sell” and raised the price target to Rs 27,200.
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Despite the changes, Dalmia Bharat and Ultratech are the brokerage’s preferred picks in the sector.
In late December, Nomura upgraded its rating for a slew of cement stocks such as Ultratech Cement, Dalmia Bharat and Ramco Cement, citing expectations of robust growth in sales, improved pricing discipline and advancement of valuations to FY26.
Nomura, too, talked about easing input costs for the sector. The report also noted that bigger players — Ultratech Cement, ACC, Ambuja, and Dalmia Bharat — were gaining pricing power due to a drop in prices of raw material like coking coal and transportation.
"Favourable margins have been sustained due to lower crude oil prices over the past six months, except for recent disruptions in the Red Sea," it said.
Also Read | Cement stocks rally after Nomura upgrades on hopes of strong volume growth
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