Cement producers outperform on strong volume growth prospects
UltraTech Cement, ACC, Shree Cements, Ambuja Cements, Ramco Cements and Dalmia Bharat ended 2-6% higher for the week. Benchmarks Nifty 50 and Sensex gained up to 2% each, testing record highs during the week.
“We upgrade our view on India’s cement industry on account of potential stronger sales volume growth, better pricing discipline, and roll forward our valuations to FY26F,” Nomura India said in a note to its clients on Wednesday.
Demand between Oct-Mar is likely to be 11% higher as compared to Apr-Sep, and 13% higher as compared to the same period the previous year, the brokerage said, raising target prices for the companies under its coverage by 11-28%.
Shares of most of these companies, except for ACC and Ambuja, have had a strong run in 2023, gaining between 23-51% so far in the year helped by demand from infrastructure and housing projects.
Sales volume for the industry is likely to grow at a compounded annual growth rate of 5% between 2023-26 (Apr-Mar), a 100 basis points higher than the 4% growth seen over the last decade, the brokerage said.
