Cement Prices Declined; However, Demand Was Healthy: Motilal Oswal

Motilal Oswal Report

Cement demand was weak in November-December 2023 due to multiple headwinds; however, this has improved in Jan-Feb-24, backed by strong infrastructure projects and pick-up in housing demand.

We believe operating profit margin should be range-bound in Q4 FY24. The positive impact of favorable operating leverage and softer fuel prices were offset by sequentially weaker cement prices.

We believe industry volume to report ~7% compound annual growth rate in the long term, backed by strong demand from infrastructure projects, housing segment, and the likely pick-up in commercial and private capex. 

UltraTech Cement Ltd. is our preferred pick in the largecap space. We like Dalmia Bharat Ltd. and JK Cement Ltd. in the midcap space, given their growth plans as well as execution strategies.

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