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Motilal Oswal Report
Cement prices have seen a sharp correction in past few months, resulting in lower profitability. After the Q1 FY25 earnings update, we had cut our aggregate Ebitda estimates for our cement coverage companies by ~8% for FY25, considering lower cement prices.
We believe that the sustainability of the recently announced price hikes is necessary to restrict further earnings downgrades in the sector.
Also, we believe that increasing consolidation in the industry, cost reduction measures by leading companies (increasing usage of green power, alternative fuel logistics cost optimization etc.) and the focus on improvement in brand presence (most of the companies are improving brand architecture and internal control) are key positive factors for the sector.
We continue to prefer UltraTech Cement in the large cap space and JK Cement in the midcap space.
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