In a recent report, Goldman Sachs has provided a detailed analysis of key players in the Indian cement sector, highlighting their current ratings, rationales, and price target adjustments. The report covers Ultratech Cement, Shree Cement, Ambuja Cements, Dalmia Bharat, and ACC Ltd., providing insights into their market positions, growth prospects, and strategic plans.
Ultratech Cement
Rationale for Buying Rating: Goldman Sachs maintains a Buy rating for Ultratech Cement, emphasising its leadership position in the Indian cement market with over 22% capacity share. Ultratech’s well-distributed pan-India presence and aggressive capacity expansion plans position it to capitalise on the anticipated increase in cement demand. Additionally, the company’s initiatives to reduce structural costs through green power, Dedicated Freight Corridors (DFC), and alternative fuels are expected to sustain its profitability above its peers.
Shree Cement
Rationale for upgrading to neutral: The analysts have upgraded Shree Cement from Sell to Neutral. This change is driven by the expectation that Shree’s volume growth will align with larger peers due to recently commissioned capacity additions and a robust expansion pipeline. Shree Cement now trades at a discount to Ultratech on FY26E EV/EBITDA, a significant shift from its previous 3-4X premium, making the risk-reward profile more balanced.
Ambuja Cements
Rationale for Neutral Rating: Goldman Sachs maintains a Neutral rating for Ambuja Cements. The report acknowledges Ambuja’s aggressive expansion plans, both organic and through mergers and acquisitions, and its potential for cost savings. However, the analysts believe the stock’s growth and profitability prospects are already priced in, given its strong year-to-date performance relative to peers.
Dalmia Bharat
Rationale for Neutral Rating: Dalmia Bharat retains its Neutral rating from Goldman Sachs. The analysts expect Dalmia Bharat to maintain or grow its capacity share, which will be supported by premiumisation and cost control measures. The company is projected to achieve double-digit revenue and EBITDA growth over the next 2-3 years. The current valuation reflects a balanced risk-reward scenario.
ACC Ltd
Rationale for downgrading to sell: Goldman Sachs has downgraded ACC Ltd. from Neutral to Sell. The downgrade is attributed to ACC’s anticipated loss of market share due to a lack of capacity additions and high exposure to markets where competitors are expanding capacity. The company is also expected to lag in cost reduction and EBITDA improvement compared to Ambuja. Despite potential volume benefits from Management Service Agreement (MSA) agreements, the analysts believe these need to compensate for the fundamental disadvantages of inadequate capacity expansion.
Price target adjustments
Shree Cement: Goldman Sachs has raised the price target for Shree Cement to ₹28,500 from ₹26,250, reflecting improved growth visibility and a higher multiple of 16X FY26E EV/EBITDA, nearing Shree’s 10-year average forward EV/EBITDA.
Ambuja Cements:The price target for Ambuja is ₹695, based on a 16X FY28E EV/EBITDA discounted back to FY26E.
ACC Ltd.: The price target for ACC is set at ₹2,500, based on a 10X FY26E EV/EBITDA.