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CLSA turns cautious on cement sector, cuts price target for 8 stocks

8 January, 2019 4:47 AM
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CLSA turns cautious on cement sector, cuts price target for 8 stocks

Global brokerage house CLSA downgraded many cement stocks as it turned more cautious on the sector and slashed its earnings per share estimates for major players for FY19-21.

India Cements was down 3.05 percent at Rs 88.95, Shree Cements down 0.01 percent at Rs 16,900, Ambuja Cements down 0.23 percent at Rs 217.80, Dalmia Bharat was down to Rs 2,438.05 and UltraTech Cement fell 0.13 percent to Rs 3,925.70 while ACC gained 0.66 percent at Rs 1,487 on the BSE on Tuesday, at 9:56 hours IST.

The research house maintained sell rating on UltraTech Cement with a price target at Rs 3,150 (revised from Rs 3,200) and Grasim Industries with a target at Rs 700 (lowered from Rs 790 earlier.

It downgraded India Cements to sell from buy with target at Rs 75 (lowered from Rs 200 earlier), Shree Cements (to Rs 18,275 from Rs 20,100) & Ambuja Cements (to Rs 250 from Rs 255) to outperform from buy, and Dalmia Bharat to underperform from buy with a price target at Rs 2,450 (lowered from Rs 2,550 earlier).

"We trimmed FY19-21 EPS estimates for major players by 3-15 percent," it reasoned.

However, it has buy rating on Ramco Cements & ACC with a price target at Rs 775 (revised from Rs 850 earlier) and Rs 1,800 (versus Rs 1,900 earlier) respectively.

CLSA said cement price hike is a must for stock price performance. "Lower energy prices are a relief, but cement prices are the key, and uncertainty prevails here," it added.

FY19 is likely to end with near double-digit demand growth, according to the brokerage.


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