Brokerage firm HSBC is bullish on India's cement sector and has picked five stocks from the sector that could rally up to 45% while upgrading 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.
UltraTech remains HSBC's top pick with "buy" rating and a target price of Rs 15,410 per share, which implies up to 23% upside
from the current market price.
HSBC upgraded rating on Ambuja Cements to "buy" from "hold," citing cost saving measures and improved capacity at acquired plants.
It also upgraded its rating on Shree Cement to "hold" from "reduce" with a price target of Rs 32,200 per share from Rs 22,000 earlier.
It has maintained its "buy" rating on Dalmia Bharat and raised its target price by 45% to Rs 2,900 from Rs 2,000 as the firm could benefit from improved pricing in the South and East regions of the country.
HSBC has a "hold" rating on ACC Ltd. with a revised price target of Rs 2,040 from Rs 2,100 earlier.
At 1:10 pm on September 16, UltraTech Cement and Ambuja Cements shares were trading 1% and 0.7% higher, respectively; while Dalmia Bharat and SHCM 0.6% and 1% higher, respectively.
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