Why Is CLSA Bullish On Cement Stocks With Ultratech As High Conviction Pick?
The Indian cement sector is once again in the spotlight, as global brokerage CLSA has turned constructive on the industry, citing improving profitability, cost rationalization, and pricing discipline. CLSA upgraded Ultratech Cement to a high-conviction Outperform with a revised target price of ₹14,700, while also upgrading Shree Cement to Outperform (TP ₹33,500), Ramco Cement to Hold (TP ₹1,045), and maintaining Outperform on Ambuja Cement (TP ₹670) and Dalmia Bharat (TP ₹2,650). The upgrades come as the brokerage sees an upswing in sector profitability, aided by coal cess elimination, improved pricing discipline, and strong demand drivers.
Ultratech Cement: The High Conviction Choice
Being part of the Aditya Birla Group, Ultratech has the balance sheet strength and execution track record to capture incremental demand from infrastructure and housing. Its strong margins, consistent expansion, and efficiency drive make it the bellwether of the cement industry.
Shree Cement: Margin Recovery In Sight
Shree has invested in sustainability and cost efficiencies, while maintaining strong regional market share. Expansion into eastern markets further diversifies growth potential.
Ambuja Cement: Stable Performer Under Adani Group
Adani’s aggressive capex plans, integration synergies, and focus on logistics efficiency position Ambuja for long-term gains, though regulatory and competitive pressures remain.
Dalmia Bharat: Regional Strength And Expansion
Dalmia’s expansion pipeline and focus on green cement strengthen its competitive positioning. Its ESG focus and growth strategy align with evolving sector dynamics.
Ramco Cement: Stabilizing Performance
While not as aggressive as Ultratech or Shree, Ramco remains a steady southern India player with potential to benefit from infrastructure-led demand recovery.
Other Important Cement Players To Watch
ACC Ltd: ~35 MTPA capacity, also under Adani Group, benefits from synergy with Ambuja. JK Cement: ~20 MTPA, strong presence in grey and white cement segments. India Cements: ~15 MTPA, south-heavy operations with turnaround potential. HeidelbergCement India: ~13 MTPA, German MNC with focus on central India. Birla Corporation: ~20 MTPA, diversified presence across multiple regions, steady growth.
Comparative Capacity Table Of Key Cement Companies
| Company | Capacity (MTPA) | Key Strength |
|---|---|---|
| Ultratech Cement | 130+ | Pan-India, cost efficiency |
| Shree Cement | 50+ | Efficiency, North India strength |
| Ambuja Cement | 30 | Adani synergy, logistics |
| Dalmia Bharat | 43 | South/East presence, green cement |
| Ramco Cement | 20 | Southern market, steady demand |
| ACC | 35 | Adani integration, brand |
| JK Cement | 20 | Grey & white cement |
| India Cements | 15 | Turnaround potential |
| HeidelbergCement India | 13 | MNC backing, Central India |
| Birla Corporation | 20 | Diversified markets |
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Risks And Sector Drivers
While the outlook is constructive, cyclicality remains inherent in the cement business. Larger players like Ultratech and Shree are better placed to withstand volatility compared to smaller peers.
Investor Takeaway
CLSA’s upgrades reflect renewed optimism in the cement sector. With Ultratech Cement as the high-conviction pick, followed by Shree, Ambuja, and Dalmia, the industry outlook is improving on the back of cost savings, disciplined pricing, and demand growth. Investors can consider sector leaders for long-term exposure, while keeping an eye on cyclical risks.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
