5 Cement Stocks To Buy That Can Benefit From Recent Price Hikes

Sharekhan has recently come-up with its stock picks on the cement sector. In fact, the brokerage has done an analysis of the sector and has suggested 5 preferred picks from the sector.

Sharekhan's stock picks from the cement sector

	Current market price	Target price
Ultratech Cement	6526	9100
Shree Cement	24712	30800
Dalmia Bharat	1545	2300
JK Lakshmi Cement	437	680
Grasim	1706	2100

Price hikes to benefit the sector

Cement companies significantly hiked prices in April 2022 across regions barring South India. The move may slow down demand in the near term, after a strong March 2022.

Petcoke prices fall

International petcoke prices corrected from March 2022 peaks, although are up 2.5% m-o-m during April 2022. Domestic petcoke prices are up 21% m-o-m. Cement players may also face domestic coal shortages in near term.

Cement stock correction an opportunity to buy

According to Sharekhan, Cement stocks have corrected by 7-25% over the trailing three months, led by surge in pet coke/coal prices, rise in diesel prices and an expected moderation in demand led by pricing actions undertaken by the industry.

"We expect cement demand and overall business dynamics to improve from H2FY2023, while long-term growth outlook for the industry remain positive, led by government-led infrastructure investments, revival in private capex and sustained momentum in the residential housing sector. Hence, we stay Positive on the sector. Our preferred picks are UltraTech, Shree Cement, Dalmia Bharat, JK Lakshmi Cement and Grasim Industries," the brokerage has said.

Business dynamics to improve

Sharekhan believes the sector should witness improvement in business dynamics from H2FY2023 with long-term growth prospects remaining intact owing to the government's focus on infrastructure development and strong momentum in the residential housing segment, which is expected to sustain going ahead.

Key risks for the stocks

A weak macroeconomic environment and increased power, fuel, and freight costs would negatively affect profitability.