Sharekhan Positive On Cement Sector, Lists 5 Stocks With Buy Rating, Sees Up To 21% Gains

Sharekhan maintains its positive view on the Cement sector in its recent equity report on the sector. The brokerage listed 3 stocks from the cement sector with a Buy rating for high gains of up to 21%. These 3 stocks are Grasim Industries Ltd., The Ramco Cements Ltd., and JK Lakshmi Cement Ltd. Other than these 3 stocks, Sharekhan also listes two stocks namely UltraTech Cement Ltd. and Dalmia Bharat Ltd. with a Buy rating. However, the stocks are Under Review (UR).

According to Sharekhan, "Pan-India cement prices stayed flat m-o-m in June 2023, as price hikes initiated in early June were rolled back before the monsoon began. Cement demand is expected to remain healthy in Q1FY2024."

Sector Outlook - Demand remains healthy with P&F cost tailwinds

According to Sharekhan, The cement industry is expected to continue to ride on healthy demand in the near to medium term aided by expedited pre-election government spend, continued focus of government on infrastructure development and sustained demand from residential housing segment. We expect healthy demand to absorb upcoming capacity additions with capacity utilization broadly remaining flattish. Further, a decline in international and domestic pet coke/coal prices since Q3FY2023 is expected to aid operational profitability during H1FY2024 as the industry passes on limited savings to end-consumers. Overall, the cement industry's outlook remains positive led by healthy demand and expected improvement in operational profitability owing to declining power & fuel costs provided the industry retains major part of savings from lower P&F costs.

Sector view - Stay Positive

According to Sharekhan, Most cement stocks have seen healthy uptick in stock prices over trailing three months led by declining pet coke/coal prices and relatively firm cement pricing environment. "We remain positive on the sector continuing our selective preference for UltraTech, The Ramco Cements, Dalmia Bharat, Grasim Industries and JK Lakshmi Cement. We have a Reduce rating on Shree Cement owing to unfavourable risk-reward led by high valuation," Sharekhan has said.

Key Risks

According to Sharekhan, the Key risks to their Buy call would be a weak macroeconomic environment and increased power, fuel, and freight costs would negatively affect profitability,

Stocks - CMP, Target Price, Upside Potentials

Stocks	CMP*	Target Price	Potential Upside	Rating
Grasim Industries,	Rs 1794.20	Rs 1950	9%	Buy
The Ramco Cements	Rs 939.30	Rs 1010	8%	Buy
JK Lakshmi Cement	Rs 705	Rs 850	21%	Buy
Ultratech Cement	Rs 8463.10	UR	-	Buy
Dalmia Bharat	Rs 2199.15	UR	-	Buy

*CMP as on Jul 03, 2023

UR- Under Review

Disclaimer

The stocks have been picked from the brokerage report of Sharekhan. 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 consult with certified experts before making any investment decision.