HSBC turns positive on cement sector; UltraTech remains top pick, Ambuja upgraded to ‘Buy’ – News Air Insight

Brokerage firm HSBC has taken a constructive stance on India’s cement sector, citing industry consolidation and disciplined pricing as key drivers of growth in the near term. It named UltraTech Cement as its preferred pick, upgraded Ambuja Cements to Buy from Hold, and reiterated its Buy rating on Dalmia Bharat, while maintaining Hold on Shree Cement and ACC.

“Increased consolidation – with the top four players now holding a 57% market share – and high leverage at smaller companies are positive for pricing,” HSBC said in its report, adding that FY26 is likely to mark the peak of capacity additions before moderating in subsequent years.

The brokerage expects a demand recovery in the second half of FY26 to support pricing momentum and profitability across the sector.

UltraTech Cement: Remains preferred pick | Target price: Rs 12,550 | Rating: Buy

UltraTech Cement continues to be HSBC’s top choice in the sector. The brokerage highlighted the company’s scale and cost efficiency as major strengths, stating: “UltraTech (Buy) remains our preferred stock, given its pan-India presence.”

It added that the company’s progress on cost-reduction initiatives has been better than expected, which is likely to provide further margin support going forward.

Ambuja Cements: Upgraded on cost savings | Target price: Rs 765 | Rating: Buy

HSBC upgraded Ambuja Cements to Buy from Hold, citing efficiency gains and operational improvements. “We upgrade ACEM to Buy from Hold as we expect cost savings from new clinker kilns and efficiency improvements at acquired capacities,” the report said.

Dalmia Bharat: Benefiting from regional strength | Target price: Rs 2,650 | Rating: Buy

HSBC reiterated its Buy rating on Dalmia Bharat, noting that the company stands to benefit from improved pricing in key geographies. “We also like Dalmia (Buy), which should benefit from stronger pricing in the South and East regions,” it said.

ACC | Target price: Rs 2,700 | Rating: Hold
Shree Cement | Target price: Rs 28,300 | Rating: Hold

HSBC maintained a Hold on both Shree Cement and ACC, citing a balanced risk-reward profile. For Shree Cement, the brokerage pointed to a profitability-over-volume focus as a key driver. For ACC, it flagged higher operating costs that could weigh on margins despite better pricing.

“We are now less optimistic on the margin/cost savings front, and accordingly we have raised our opex estimates by 9–10%, resulting in a 19–23% decline in our EBITDA estimates for the same period,” HSBC said on ACC.

Sector outlook

HSBC reiterated its constructive view on the cement sector, supported by demand recovery, pricing discipline, and moderating capacity additions beyond FY26. The brokerage forecast EBITDA per tonne to grow at a 13% CAGR over FY25–28, with average selling prices expected to rise steadily during this period.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)