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Motilal Oswal Report
We estimate the cement demand momentum to improve due to the Government’s intensifying focus on affordable housing and infrastructure development (expanding rail, roads, and construction of airports), continuing strong demand from real estate, and likely pick-up in industrial capex.
We believe the announcements under the forthcoming Budget will be the key monitorables.
We estimate cement demand to register a compound annual growth rate of 7.5% over FY24-27, higher than our supply growth estimate of ~7.0% over the same period. Further, we estimate clinker utilization to improve to 81% by FY27 from 78% in FY24.
We shift our valuation multiples for our coverage companies to June-26E from FY26E. We prefer UltraTech Cement Ltd. and Grasim Industries Ltd. in the large-cap space while, JK Cement Ltd. and JK Lakshmi Cement Ltd. are our preferred picks in the mid-cap space.
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