
JM Financial has released an optimistic outlook on India’s cement sector, highlighting accelerated consolidation, cost optimization, and strong demand drivers as key trends shaping the industry’s future.
Key observations:
- Consolidation and profitability: The cement sector has undergone significant consolidation, leading to pricing and profitability pressures. However, with major acquisitions now largely completed, the focus is expected to shift towards enhancing profitability and returns.
- Demand drivers and growth: Positive demand trends position the sector for a 7-8% CAGR over FY25-FY27, with the industry focusing on reducing cyclicality through cost optimization and de-risking strategies.
- EBITDA projections: Companies under JM Financial’s coverage are expected to report an over 25% EBITDA CAGR during FY25-FY27, with EBITDA per tonne rising from ₹889 in FY25 to ₹1,123 in FY27.
Top stock picks:
- UltraTech Cement: Buy call with a target price of ₹13,000/share.
- Ambuja Cement: Buy call with a target price of ₹685/share.
- JK Cement: Buy call with a target price of ₹5,300/share.
The brokerage anticipates robust profitability growth driven by structural changes and sustained demand, making these cement stocks attractive for long-term investors.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.