The brokerage firm JM Financial remains optimistic about cement sector stocks. In its latest note, the firm has listed UltraTech Cement and JK Cement as its top picks among large-cap and mid-cap cement stocks.
JM Financial has a Buy rating on UltraTech Cement with a target price of Rs 13,500 per share, implying 22% upside. It has also assigned a Buy rating to JK Cement, setting a target of Rs 5,850 per share. This indicated nearly 6% upside for the stock going forward.
Here are three key reasons why these stocks made it to the top of JM Financial’s recommendation list.
JM Financial on Cement sector: Cement prices are near 17-month highs
According to JM Financial, pan-India cement prices remained flat month-on-month in May 2025, but are still up around 7% to 8% year-on-year, hovering at Rs 388 per bag. This is the highest level seen in nearly 17 months.
“In Q1FY26 so far, average prices are up 4% sequentially, mainly led by South (up 10-11% QoQ) and East (up 4-5% QoQ),” the brokerage said.
While prices saw a steep hike in April, they plateaued in May due to early monsoon showers and some softness in demand. Still, the current price levels offer solid support to margins in the near term.
JM Financial on Cement sector: Demand is soft now, but the long term outlook is strong
As per the brokerage report, the demand in May took a slight hit, impacted by the early onset of monsoon and Indo-Pak border tensions in the North.
The brokerage noted in its report that industry-wide cement demand was likely flat year-on-year in May. However, the bigger picture remains strong.
“Given the government’s focus on infra and housing projects, along with increased rural/urban demand, sustainable volume growth of 6-7% is expected in the coming years,” JM Financial noted.
For now, North India may remain a weak spot, but the rest of the country is likely to support overall volume growth.
JM Financial on Cement sector: Lower fuel costs and EBITDA recovery in sight
One of the biggest cost components for cement makers is petcoke, and the recent global trends are favourable. According to JM Financial, spot US petcoke prices are down 7% compared to Q4FY25 averages, which should help cement makers save on input costs.
“In 4QFY25, companies under coverage saw their aggregate EBITDA grow 12% YoY and 66% QoQ,” the report said. The EBITDA per tonne also rose sharply to Rs 1,099, up Rs 273 per tonne compared to the previous quarter.
JM Financial expects this momentum to continue, forecasting a 20% EBITDA CAGR over FY25-28, driven by improved cost efficiencies and better realizations.
