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Motilal Oswal bullish on 3 Cement stocks with upside of up to 24% 

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Cement manufacturing companies are expected to do well for the next few years due to better demand prospects led by infrastructure and housing sectors, heightened industry consolidation, and regulatory changes in the allotment of limestone blocks.

Motilal Oswal (NS:) in a report said that the average price of a 50kg cement bag has gone up 3% on a quarter-on-quarter basis in the latest quarter (Q3FY23). It estimates a 10% YoY (year on year) growth in volumes in the December quarter and a three-year CAGR at 5.4%, aided by strong infrastructure and real estate demand as well as the low base effect of last year.

The report further highlighted that over the last few years, better pricing power was witnessed in the March-April period leading to improved realization during the April-June quarter (1Q of FY20-23).

Strong volumes improve clinker utilisation, the expectation of cement prices remaining strong in the fourth quarter of FY23, subsiding cost pressures and improving profits are key points that emerge for the industry.

Sharing its outlook on the cement sector, brokerage firm Motilal Oswal Financial assigned a buy rating on six stocks:

Birla Corporation (NS:)

Motilal Oswal has a buy rating on Birla Corporation with a target price of ₹ 1200. This translates to an upside of 23.71% as compared to its share price of 970 levels.

Birla corporation manufactures cement of various categories and it also has a presence in the jute goods industry. It has a market capitalization of ₹ 7477 crores and is a small-cap company.

JK Cements

The brokerage has a buy call on JK Cement (NS:) with a target price of ₹ 2905. This indicates an upside of 20.14% as compared to its share price of ₹ 2905 levels on Monday.

The company is engaged in the manufacturing and selling of cement and cement-related products with more than 40 years of experience in cement manufacturing. It is an affiliate of the industrial conglomerate JK Organization.

Grasim Industries (NS:)

Motilal Oswal has a buy call on Grasim Industries with a target price of ₹ 1970. This implies an upside of 19.46% as compared to its share price of ₹ 1649 levels. It is a midcap company with a market capitalization of ₹ 22,460 crores

Grasim Industries is the flagship company of the Aditya Birla group and it ranks among India’s largest private-sector companies. It is in a few other businesses like fertilizers, textiles and so on. It is a large-cap company with a market capitalization of ₹ 1,08,432 crores.

In addition to the above, Motilal Oswal has a buy call on the shares of Ultratech Cement (NS:), Dalmia Bharat, and JK Lakshmi Cement (NS:) for an upside of up to 10%. It has a neutral rating on Shree Cement (NS:), Ambuja Cements (NS:), ACC (NS:) and The Ramco Cements (NS:); and a sell rating on India Cements (NS:).

Written by Simran Bafna

The post Motilal Oswal bullish on 3 Cement stocks with upside of up to 24% appeared first on Trade Brains.

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