CLSA Prefers UltraTech and Shree Cement, Sees Second-Half Recovery for Cement Sector
Key Takeaways
- •CLSA has identified UltraTech Cement and Shree Cement as its preferred stocks within India's cement sector.
- •Indian cement companies' Q1 earnings broadly beat expectations, driven by stronger-than-expected volume growth and better cost performance.
- •CLSA expects sector profitability to come under pressure in Q2FY27 (July-September) due to higher fuel costs, weaker volumes, and negative operating leverage.
- •The brokerage anticipates a cement sector recovery in the second half of FY27, covering October 2026 through March 2027.
- •UltraTech Cement, part of the Aditya Birla Group, is India's largest cement producer, while Shree Cement is one of the country's leading manufacturers.
Brokerage firm CLSA said it prefers UltraTech Cement and Shree Cement among Indian cement stocks and expects a recovery for the sector in the second half of the fiscal year.
Cement companies' Q1 earnings broadly surprised on the upside, driven by stronger-than-expected volume growth and better cost performance, the brokerage noted. This helped support consensus earnings estimates despite continued cost pressures, underscoring how closely the sector's near-term performance still tracks input costs and demand trends.
However, profitability is likely to come under pressure in Q2FY27 — the July–September quarter — amid higher fuel costs, weaker volumes and negative operating leverage, according to CLSA. That sets up a softer quarter before the expected improvement later in the fiscal year, making upcoming results important for tracking whether cost pressures ease as the year progresses.
CLSA is a Hong Kong-headquartered global brokerage and investment group. UltraTech Cement, part of the Aditya Birla Group, is India's largest cement producer, while Shree Cement is one of the country's leading cement manufacturers. India's fiscal year runs from April to March, meaning the second half of FY27 covers October 2026 through March 2027.
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Source: CNBC-TV18
