Best 4 Cement Stocks To Buy For Upto 28% Return, Strong Sales Reported In Q4FY22

Indian equity markets have fallen marginally, Nifty 50 stood at around 16,216.00 points, till last traded. However, brokerage firm Emkay Global has suggested buying these 4 below-mentioned cement stocks amid bearish market conditions.

Emkay Global retained the buy rating for Ultratech and Shree Cement among the large-caps, and Birla Corp among the mid-caps and Sagar Cement among the small-caps.

Stocks To Buy: Target Price

The current market price of Ultratech Cement stood at Rs. 5,850/ share, and Emkay Global has estimated a target price for the stock at Rs. 6,650/share. In the past one year the company's stock price has fallen by 17.53%, in the past 6 month the stock price has fallen by 23.62%. In Q4FY22, the company's sales reported at 27.7 mt gaining by 9.9% QoQ.

The current market price of Shree Cement stood at Rs. 19,800.05/ share, and Emkay Global has estimated a target price for the stock at Rs. 22,400/share. In the past one year the company's stock price has fallen by 17.53%, in the past 6 month the stock price has fallen by 25.89%. In Q4FY22, the company's sales reported at 8 mt gaining by 6.6% QoQ.

The current market price of Birla Corp stood at Rs. 905/ share, and Emkay Global has estimated a target price for the stock at Rs. 1,070/share. In the past one year the company's stock price has fallen by 30.37%, in the past 6 month the stock price has fallen by 39.79%. In Q4FY22, the company's sales reported at 4.2 mt gaining by 8.59% QoQ.

The current market price of Sagar Cement stood at Rs. 175/ share, and Emkay Global has estimated a target price for the stock at Rs. 225/share. In the past one year the company's stock price has fallen by 21.70%, in the past 6 month the stock price has fallen by 35.79%. In Q4FY22, the company's sales reported at 1.1 mt gaining by 5% QoQ.

Company	Current market price	Target price	Return
Ultratech	Rs. 5,850	Rs. 6,650	13.67%
Shree Cement	Rs. 19,800	Rs. 22,400	13.13%
Birla Corp	Rs. 905	Rs. 1,070	18.23%
Sagar Cement	Rs. 175	Rs. 225	28.57%

Emkay Global Says:

"Our coverage companies are expected to report a 26% YoY and 16% QoQ decline in EBITDA in Q1FY23 due to the sharp rise in input costs, partially offset by better cement prices. As a result, the average EBITDA/ton may fall by 37% YoY (Rs525/ton) and 10% QoQ (Rs. 100/ton) to Rs. 913. We expect overall EBITDA/ton to decline by Rs. 200-250/ton in H1FY23 vs. Q4FY22, due to higher costs and subdued realizations amid a seasonally weak demand period. As demand improves and cost pressure eases, profitability should see a gradual recovery from H2FY23 onward. After a 25-35% (ex-ACC/Ambuja) correction in stock prices, cement EV/EBITDA multiples are now ~10% below the 3Y average."

The firm thinks that the risk-reward is favorable, even as the catalysts maybe 1-2 quarters away. Any prospects of an easing in cost pressure or cement price hikes could act as positive catalysts.

Disclaimer

The above stocks were picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.