Citi India Strategy has upgraded the cement sector to “Overweight” from “Neutral,” citing expectations of volume recovery in H2 CY24 and stabilization of EBITDA per ton metrics. The brokerage has recommended adding Ramco Cement to its mid-cap picks while switching out of Devyani International in favor of Jubilant FoodWorks.
Key highlights include:
- Valuations improve post Nifty correction: After a 10% drop, Nifty valuations are now more reasonable, with a 1-year forward P/E just above the 5-year average.
- Sectoral performance: Financials, industrials, healthcare, and telecom sectors showcased double-digit growth in Q2, while consumer discretionary sectors lagged.
- Recovery expectations: Potential recovery in public capex and rural demand in H2 is a positive. Urban consumption and asset quality remain crucial metrics to watch.
- Key Overweights and Underweights: Citi continues to favor financials, telecom, and pharma, while maintaining an underweight on consumer discretionary, IT, and metals.
Citi maintains a Nifty target of 25,000 by September 2025, implying a 7% upside from current levels.
Disclaimer: This report is for informational purposes only and should not be considered investment advice. Please consult a financial advisor before making investment decisions.
