Top Stock Picks: HDFC Securities Recommends These Cement Stocks To Watch Now

HDFC Securities has issued a sector update, selecting ACC as its top selection in the cement category with a 'BUY' rating and a target price of Rs 2,570. The brokerage has also placed 'ADD' rating on the shares of Ambuja Cement for a target price of Rs 370.

As per the brokerage "Our analysis suggests India remains a major market for Holcim and its Indian cement operations lead, with a lower carbon footprint. However, Holcim recently accelerated focus to expand the revenue share of green and sustainable solutions & products (S&P), at the expense of its cement business. Thus, it has been selling off cement assets in various geographies and acquiring assets in the US and Europe to augment its S&P revenue. This adds credence to the market chatter of its India exit, as that can fast-track Holcim's 2025 goals."

"We believe the mammoth investment (of ~USD 10.5bn) required by any potential buyer can delay the deal execution and slow down the expansion pipeline of ACC and Ambuja over next 2-3 years, thereby benefitting the industry's pricing power. We currently have a BUY on ACC (TP INR 2,570/sh) and an ADD on Ambuja (TP INR 370/sh)," the brokerage has further added.

HDFC Securities has claimed that "We currently have a BUY recommendation on ACC, with a TP of INR 2,570/sh (12x its Mar-24E consolidated EBITDA). We have an ADD rating on Ambuja, with an SOTP based TP of INR 370/sh (valuing its cement business at 14x its Mar-24E standalone EBITDA and its 50% holding in ACC at a 30% discount to our target market cap)."