Indian Cements, UltraTech Cement and other cement stocks rise; here's why

Cement shares rallied in Thursday's trade after 20 per cent equity or 6.02 crore shares changed hands in India Cements in the pre-opening session and Goldman Sachs revised its stance on major cement stocks. Among the cement stocks, at the last count, individually, shares of India Cements were up over 11 per cent, UltraTech Cement was up over 5 per cent, ACC was up over 1 per cent, Shree Cement shares was up over 2 per cent, Ambuja Cements shares were up over 2 per cent and JK Cement was up over 2 per cent.

Goldman Sachs on cement sector:

As per the brokerage, general elections and severe summer temperatures impacted construction activity in Q1, and thus, expects volumes to be flat in the April to June quarter.

Further, Q4 exit prices of cement were one to two per cent below the Q4 average which is unlikely to be sustained given monsoon is about to start. 

Their channel checks suggest price hikes in June have not been sustained

What should investors do? 

Goldman Sachs double-downgraded ACC stock to 'sell' and raised the target to Rs 2,500 from Rs 2,135. Conversely, it double-upgraded Shree Cement to 'neutral' and raised its target to Rs 28,500 from Rs 26,250.

Meanwhile, it maintains 'buy' on Ultratech Cement and raised target to Rs 11,650 from Rs 10,700.

Additionally, it continued with a 'neutral' rating on Ambuja Cement and raised the target to Rs 695 from Rs 450.

Lastly, Goldman Sachs maintained a 'neutral' rating on Dalmia Bharat and cut the target to Rs 1,900 from Rs 1,935.

In Wednesday's trade, India Cements, JK Lakshmi Cement, Ambuja Cements and Sanghi Industries soared. The result of the rise can be attributed to Sanghi Industries' offer for sale (OFS) that opened for non-retail investors on the same day. 

Sanghi Industries' offer for sale (OFS) opened for non-retail investors will stay open till Thursday. In the OFS, Sanghi Industries' promoter Ambuja Cement and Ravi Sanghi would sell their 3.52 per cent stake.

The floor price has been fixed at Rs 90 per share. As many as 90.92 lakh shares will be sold through the OFS. While Ambuja Cements will sell 60.92 lakh shares, Ravi Sanghi will offload 30 lakh shares (2.36 per cent and 1.16 per cent, respectively 3.52 per cent).

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