UBS Securities bets on 3 cement stocks with up to 25% upside potential

UBS Securities has highlighted Ambuja Cement, UltraTech Cement, and Dalmia Bharat as its top stock selections in the Indian cement sector, underscoring their significant potential to benefit from a rebound in demand, lower input costs, and continued structural reforms in the industry.

This comes despite a subdued start to FY26 for the sector, with cement volumes rising just 3% year-on-year in Q1—falling short of UBS’s 10% growth estimate. The weaker performance was largely due to the early arrival of the monsoon and sluggish demand in consumer-driven regions.

Still, UBS remains optimistic about the sector’s near- to medium-term prospects, forecasting robust EBITDA growth in Q2 and reaffirming its full-year volume growth outlook of 7–8%.

Industry players also maintain confidence, sticking to their full-year volume targets. Demand varied regionally, with strong growth in central India contrasting with weaker performance in the northern region. Major cement producers saw modest volume increases, while mid-sized firms faced sharper declines. Ongoing GST rationalization and profitability-driven reforms are seen as key factors supporting near-term demand recovery and potential price increases—further reinforcing the sector’s long-term growth prospects

Reflecting this positive view, UBS is bullish on several major cement stocks, anticipating strong upside potential fueled by volume recovery, easing cost pressures, and margin improvements.

Live Events

The brokerage has assigned a Buy rating to UltraTech Cement, setting a price target of Rs 14,700. This suggests a significant upside potential of around 14% from its current market price of Rs 12,850 as of August 21, 2025, indicating strong confidence in the stock’s growth prospects.Ambuja Cement is another favored pick, with a price target of Rs 710, implying an upside of approximately 21% from its current price of Rs 588.95. This reflects the brokerage’s positive outlook on the company’s ability to capitalize on market recovery and cost efficiencies.For ACC, set a target price of Rs 2,350, representing a potential gain of 27% over its current price of Rs 1,848. This highlights ACC’s promising growth trajectory and value proposition.Dalmia Bharat’s price target stands at Rs 2,700, indicating an upside potential of 15% compared to the current market price of Rs 2,348.30, underscoring its strong position within the sector.

The key drivers of cement demand—housing (both rural and urban), infrastructure development, and commercial construction—remain firmly in place. These factors are expected to support healthy sector-wide volume growth over the medium term, with estimates pointing to a 7–8% compound annual growth rate (CAGR). This would be roughly 1.0–1.2 times the pace of real GDP growth, indicating a strong underlying demand environment.

After a sharp decline in FY25, cement prices are expected to recover in FY26 and FY27, improving sector profitability. Additionally, a new wave of capacity additions is anticipated to begin across various regions starting in Q4FY25, which should help meet growing demand and support long-term growth.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}