Last Updated : Feb 27, 2020 12:13 PM IST | Source: Mint

Brokerages bullish on cement stocks; UltraTech Cement, ACC, JK Cement in focus

Motilal Oswal has maintained buy on UltraTech Cement, ACC, JK Cement, JK Lakshmi Cement, Dalmia Bharat, Birla Corp and Prism Johnson.

Representative image
Representative image

Brokerages maintained their positive stance on the cement space citing improvement in utilisation to enhance profitability.

ICICI Securities said pan-India clinker utilisation is likely to cross 80 percent by FY21E after almost a decade enabling EBITDA-accretive price increases.

It believes that the prices will remain firm with a positive bias, given higher utilisation from January to June.

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Cement companies are likely to benefit from lower input prices during H1CY20, it added.

The brokerage maintained a buy rating on UltraTech Cement, ACC, Shree Cements, JK Cement and JK Lakshmi Cement, while UltraTech and Shree Cements will be the preferred picks in the sector.

Motilal Oswal expects cement sector utilisation to improve structurally over the next three years given limited capacity addition at 4 percent CAGR, while it expects demand CAGR to sustain at 6 percent – in line with past five years.

Motilal Oswal has maintained buy on UltraTech Cement, ACC, JK Cement, JK Lakshmi Cement, Dalmia Bharat, Birla Corp and Prism Johnson.

It likes ACC as a value pick, UltraTech as top largecap and JK Cement as top midcap pick.

However, it does not see much upside in Shree Cements and Ramco Cement, as their potential market share gains over the next three years are already priced in.

After seeing a price hike in January and early February, it expects a correction of Rs 15-20/bag in the month of March.
First Published on Feb 27, 2020 11:59 am
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