UBS has turned bullish on the Indian cement sector, upgrading UltraTech Cement, Ambuja Cements, and Dalmia Bharat to ‘Buy’ from earlier ratings of ‘Neutral’ or ‘Sell’. The brokerage believes the recent rough patch in the sector is nearing its end, with a combination of demand revival, easing cost pressures, and ongoing industry consolidation setting the stage for a significant earnings upcycle from FY26 onward.
UBS notes that cement prices fell sharply by around 8% in the first nine months of FY25, weighing on profitability. However, the bottom appears to be in sight, and price stabilization is now expected. More importantly, structural cost-saving initiatives across large players, including optimization of logistics and energy efficiency, are likely to drive margin recovery. The brokerage expects demand to pick up meaningfully on the back of a housing upcycle and higher government infrastructure spending, further supporting volume growth.
UBS upgraded UltraTech Cement to ‘Buy’ with a revised target price of ₹13,000 (earlier ₹9,000), citing its industry-leading scale and strong balance sheet. Ambuja Cements was upgraded from ‘Sell’ to ‘Buy’ with a new TP of ₹620 (from ₹475), while Dalmia Bharat was upgraded to ‘Buy’ with a TP of ₹2,100. UBS also reiterated a ‘Buy’ on ACC with a target of ₹2,250.
The brokerage adds that the sector’s valuation is currently trading only slightly above its five-year average EV/EBITDA, suggesting further room for rerating as earnings recover.
