Axis Securities maintains a positive outlook on the Indian cement sector from a medium to long-term persceptive. Although near-term earnings may remain impacted by elevated fuel costs, the structural demand outlook continues to strengthen. The recent corrections in large-cap and select mid-cap cement companies have improved valuation comfort and provide attractive opportunities for long-term, believes the brokerage.
investors.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Axis Securities Report
Domestic brokerage firm Axis Securities expects the Q2 FY27 earnings season to reflect healthy cement demand, supported by sustained government infra spending, resilient rural housing demand and continued public capex execution, but also flags that elevated fuel and input costs are likely to keep profitability under pressure, making sustainability of recent cement price hikes critical for margin recovery.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Despite near-term earnings headwinds, the sector's medium-to-long term outlook remains positive, underpinned by strong structural demand, industry consolidation, and ongoing investments in cost-efficient operations.
For companies under the brokerage coverage, volume/revenue are expected to grow by 10%/8% while EBITDA/PAT are expected to contract by ~4%/35% YoY as higher costs impact profitability growth.
On a sequential basis, performance is expected to be lower as volume/revenue/EBITDA/PAT are expected to de-grow by ~8%/9%/27%/42%, owing to an increase in fuel and logistics costs and negative operating leverage.
Current stock price corrections in large and mid-cap cement names offer an attractive medium-term entry, believes Axis Securities, hence companies with green energy and domestic coal and waste heat recovery system investments will outperform in FY27-28. Hence UltraTech Cement and JK Cement are the brokerage's top positive result play in the sector.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
