UltraTech, JK Lakshmi: HDFC Securities Top Stock Pick In Cement Sector; Q1 Results Preview

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HDFC Securities Institutional Equities

We estimate cement demand will pick up FY26E onwards as against subdued offtake in FY25. The recent spur in cement prices in the eastern and southern regions bodes well and could stabilize pricing and margin there, which had reached multi-year lows.

We estimate average net sales realisation for our coverage universe will grow at 1.6% CAGR over FY25-27E as against a sharp 6% fall in FY25. Overall opex should continue to decline (we estimate -1.5% CAGR), aided by rising share of low-cost green energy and logistics efficiencies. Thus, we estimate industry unit Ebitda will recover to a ~20- year high of Rs 1,115/MT in FY27E.

We maintain earnings estimates and target prices for our coverage universe.

We have BUY ratings on UltraTech, Dalmia Bharat, Nuvoco Vistas, Birla Corp, JK Lakshmi, and Star Cement.

We also maintain Add on Shree Cement, Ambuja Cement, ACC, JK Cement, and Sagar Cements.

We have Reduce ratings on Ramco Cements, Heidelberg Cement, Orient Cement, and Deccan Cements.

Our top picks: large-cap— UltraTech Cement; mid-cap—JK Lakshmi.

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