Buy 1 Large Cap & 3 Small Cap Cement Stocks For Potential Upside Up To 33%, Says Emkay Global

Emkay Global in its recently published Q2FY23 preview report on the Cement sector has given a buy call to 4 major cement stocks namely Ultratech Cement, Shree Cement, Birla Crop and Sagar Cements. Here are details and brokerage comments on the stocks:

UltraTech Cement Limited

According to the brokerage, total volumes in India are expected to increase 9% YoY (decline 7% QoQ) to 22mt, while grey cement realizations should decline by ~5% QoQ. Total cost/ton is estimated to increase 18% YoY/5% QoQ. Accordingly, we estimate blended EBITDA/ton in India to decline 41% YoY/37% QoQ to Rs785.

Ultratech Cements is a large-cap cement stock having a market capitalisation of Rs 1,76,487 crore. The brokerage in its report has given a target price of Rs 7,100 to the stock with a buy rating. The brokerage sees potential gains of up to 16%.

The Current Market Price (CMP) of stock on NSE is Rs 6,123.30 per share on NSE. The stock in the past 1 week has fallen 3.01%, whereas, in the past 1 and 3 months it gave a 10.94% negative return and 5.87% positive return. Over the past 1 year, it gave 15.62% negative return. However, in 3 and 5 years, it gave more than 50% returns to shareholders, In 3 years it gave 50.05% and in the years it gave 56.07% positive returns.

Shree Cement Limited

According to the brokerage, Cement volumes are expected to increase 18% YoY/stay flat QoQ at 7.5mt, while blended realization is estimated to decline by 5% QoQ. Total cost/ton should increase by 23% YoY. Thus, blended EBITDA/ton is expected to decline by 42% YoY/24% QoQ to Rs825.

It is a small-cap cement stock having a market cap of Rs 75,823.69 crore. The brokerage has given a buy call with a target price of Rs 23,550 per share. Considering this, the stock is likely to surge 13% in 12 months.

The stock is currently trading at Rs 21,019.95 per share on NSE, 1.05% up from its previous close. It has given 12.78% negative return in the past 1 month, however, in the past 3 months, it gave a 5.45% positive return. Over a year, the stock has fallen, giving a negative return of 24.02%. Over the past 3 and 5 years, it gave 14.56% and 13.57% positive returns, respectively.

Birla Corporation Limited

According to the brokerage, volumes are expected to increase 12% YoY/ decline 7% QoQ to 3.7mt, while cement realizations are estimated to decrease by ~5% QoQ. Total cost/ton could increase by 14% YoY/flat QoQ. Accordingly, EBITDA/ton is expected to decline by 51% YoY/39% QoQ to Rs400.

It is the second small-cap cement stock in the buy list having a market cap of Rs. 6,938.95 crore. The brokerage has given a buy call with an estimated target price of Rs 1,200 per share. According to the given target price, the stock is likely to surge up to 33% in 12 months.

On the NSE, the stock is currently trading at Rs 902.25 per share, down 0.36% from its previous close. It has given 4.43% negative return in the past 1 week and 16.94% in the past 1 month, respectively. However, it gave a 0.63% positive return in the past 3 months. Over a year, it has given a massive 35.38% negative return on investments. However, in the past 3 years, it have a massive 72.89% positive return on investments. In the past 5 years, it gave 10.37% negative return.

Sagar Cements Limited

According to the brokerage, volumes may increase 22% YoY/decline 13% QoQ to 1mt, while cement realization could drop by 3% QoQ. Total cost/ton is expected to increase by 22% YoY/5% QoQ. Therefore, EBITDA/ton is likely to decline 79% YoY/71% QoQ to Rs150.

This is the 3rd small cap cement sector stock in the  buys list of Emkay Global. It has a market cap of Rs 2,656.63 crore. The brokerage has rated the stock buy with a target price of Rs 225 per share. The given target price suggests a potential upside of 11% in 12 months if the stock is purchased at the current market price.

The current market price (CMP) for the stock on the NSE is Rs. 203.20 per share. It has given a 2.21% positive return over a week, and a 5.77% negative return over a month. In the past 3 months, it gave a 16.85% positive return. In the past 1 year, it has given 29.17% negative return. However, in the past 3 years, it gave a massive 80.51% positive return. In the past 5 years, it has given a 20.94% positive return.

Disclaimer

The stocks have been picked from the brokerage report of Emkay Global. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.