Ambuja, UltraTech, Shree Cement Get Sharp Target Price Hikes — HSBC Bullish On Top Players

Consolidation in the cement industry will drive price discipline and benefit large players like Ambuja Cement Ltd., UltraTech Cement Ltd., and Shree Cement Ltd., according to multinational investment firm HSBC. Analysts sharply raised the share price targets for these companies.

"We expect the top four companies, which now have a combined market share of 57%, to dominate capacity additions, which we think will peak in FY26 and then moderate," an HSBC note said.

Analysts said they expect cement prices to start rising in the high single digits starting in November, leading to a rise in Ebitda per ton by 4.3% and production capacity over the next three years.

Demand will recover after a weak FY25, given that a large base and steady government support will see demand growth normalize in the 6-7% range annually over the next three years.

The GST Council slashed the tax rate on cement to 18% from 28%, effective Sept. 22. Analysts at Nomura have said the GST cut is structurally positive for the industry, as it would make premium and Category A products more affordable for customers, thus increasing the adoption rate.

HSBC maintained its 'buy' rating on industry leader UltraTech Cement as its preferred stock, given its pan-India presence.

Ambuja Cement got an upgrade from 'hold' to 'buy' on expectations of cost savings on the back of new cluster additions from improvements in economies of scale expansion.

Dalmia Bharat, rated 'Buy', could benefit from improved pricing in the South and East region.

A similar factor also drives HSBC's upgrade of Shree Cement to 'hold' from 'reduce'.

• Ambuja Cement – Price target raised to Rs 700 from Rs 490.

• Shree Cement – Price target raised to Rs 32,200 from Rs 22,000.

• UltraTech Cement – Price target raised to Rs 15,410 from Rs 12,100.

• Dalmia Bharat – Price target raised to Rs 2,900 from Rs 2,000.

• ACC – Price target reduced to Rs 2,040 from Rs 2,100.