Cement stocks have seen a notable surge, rallying over 5% on the Bombay Stock Exchange (BSE), following a sector-wide upgrade by ICICI Securities. The brokerage firm raised its outlook on the cement sector from neutral to positive, citing improved sector fundamentals, stronger pricing power, and robust capacity expansions.
In Monday’s intra-day trade, UltraTech Cement, Grasim Industries, Shree Cement, JK Cement, and Nuvoco Vistas saw a boost in their stock prices, reflecting a growing optimism about the recovery of cement demand in India. ICICI Securities upgraded all five companies to a “buy” rating, highlighting favourable conditions driven by the sector’s improved competitive dynamics and pricing outlook. UltraTech Cement led the rally, climbing 5.3% to reach an intra-day high of ₹11,777 per share. Other significant gainers included Shree Cement, JK Cement, and Dalmia Bharat, which posted gains ranging from 1% to 5%.
ICICI Securities attributed its upgraded outlook to reduced competitive pressures due to mergers and acquisitions (M&A), which have led to industry consolidation, along with expectations of stronger pricing power. According to the brokerage, the sector is poised for an upcycle, supported by the easing of competitive intensity, robust capacity expansions, and the anticipated recovery in cement demand. The brokerage projected an 8-16% increase in EBITDA estimates for the sector by FY26. The improved market environment follows a period of intense consolidation in the sector. UltraTech Cement, for instance, recently announced the expansion of its Kukurdih unit in Chhattisgarh, increasing its capacity by 0.6 million tonnes per annum (mtpa) to 3.3 mtpa. This marks a shift towards organic growth, with companies now focusing on optimising recent acquisitions rather than further expansion through mergers.
The consolidation in the cement sector has significantly increased the market share of top players. As per ICICI Securities, the top five companies now control 62% of the industry’s capacity, compared to just 45% in FY19. This has strengthened their ability to implement price hikes and stabilise margins. ICICI Securities has also maintained a “Buy” rating on Ambuja Cement, its top pick, due to its operational efficiencies and growth prospects. Additionally, Ramco Cement has received an upgraded “Add” rating, reflecting its solid positioning for organic growth. The brokerage’s positive outlook is buoyed by expectations of stable fuel costs, increased infrastructure spending, and a recovery in the real estate sector, all of which are anticipated to support the cement industry’s growth trajectory in the coming years.
