JP Morgan Top Cement Stocks Picks: Brokerage reshuffles ratings, keeps UltraTech Cement on peak

Brokerage firm JP Morgan has said cement companies may face challenges in raising prices further as demand growth slows after a strong January. The brokerage noted that while companies implemented minor price hikes in February, the increases were lower than expectations and demand momentum appears to be plateauing.

Price hikes weaker than expected, demand momentum slows

JP Morgan said cement price hikes in February remained modest and did not meet market expectations. The brokerage added that demand, which was strong in January, is now showing signs of stabilising rather than continuing to grow.

Add Zee Business as a Preferred Source

The brokerage warned that without strong volume growth, it would be difficult for cement companies to sustain further price increases. Pricing power in the cement sector depends heavily on demand growth and capacity utilisation. Slower demand could limit earnings upside in the near term.

UltraTech Cement remains top pick

JP Morgan said it continues to prefer UltraTech Cement over other cement companies. The brokerage maintained an “overweight” rating on the stock and kept its target price at Rs 15,000, compared with the current market price of Rs 13,052. This implies potential upside if demand and pricing improve.

The brokerage’s overall preference order among cement companies is:

- UltraTech Cement

- Ambuja Cement and ACC

- Dalmia Bharat

- Shree Cement

Dalmia Bharat upgraded on valuation comfort

JP Morgan upgraded Dalmia Bharat to “neutral” from “underweight” and raised its target price to Rs 2,215 from Rs 2,000. The upgrade was driven by fair valuations after recent stock price corrections. The stock is currently trading at Rs 2,128.

However, the brokerage cautioned that volume growth outlook remains weaker compared to peers.

Ambuja Cement and Shree Cement see mixed outlook

JP Morgan maintained a “neutral” rating on Ambuja Cement and reduced its target price to Rs 540 from Rs 585. The brokerage expects limited upside due to near-term demand uncertainty.

For Shree Cement, JP Morgan maintained an “underweight” rating with a target price of Rs 23,400, lower than the current market price of Rs 26,635. This suggests downside risk if demand and pricing remain weak.

Sector outlook depends on demand recovery

JP Morgan said cement companies’ ability to increase prices will depend on volume growth. If demand improves, companies may regain pricing power. However, plateauing demand could limit earnings growth in the near term.

The brokerage prefers companies with stronger scale, better cost control, and higher market share, with UltraTech Cement emerging as its top pick in the sector.