A sharp turn in the cement cycle is drawing brokerage attention, with HSBC Securities and Capital Markets India naming a clutch of stocks where earnings growth could accelerate as supply pressures ease. In a sector note, the firm has reiterated ‘Buy’ ratings on UltraTech Cement, Ambuja Cements, and Dalmia Bharat, while initiating coverage on Nuvoco Vistas with a ‘Buy’.
The common thread across these calls is a view that capacity additions will peak in FY27 and slow thereafter, while demand continues to grow steadily, setting up better pricing conditions. Target prices from HSBC suggest upside ranging from 27.7% to 45%, led by Nuvoco at Rs 420 and Ambuja at Rs 590.
HSBC on Nuvoco Vistas: ‘Buy’
HSBC has initiated coverage on Nuvoco Vistas with a ‘Buy’ rating and a target price of Rs 420, implying a 45% upside from the current price of Rs 289.60.
The brokerage’s investment case is centred on a recovery in East India, where Nuvoco derives a large part of its business. For years, the region has faced excess capacity, keeping prices weak and limiting earnings growth. HSBC now expects that cycle to reverse as fresh capacity additions slow sharply over the next few years.
The report notes that capacity expansion in the East is likely to drop to a 4% growth rate over FY26 to FY30 compared to nearly 10% earlier. With demand continuing to grow, this should reduce oversupply and support better realisations.
“Over the next three years, we expect pricing in the East to be among the strongest in India,” HSBC says.
The brokerage also points to the Vadraj acquisition as a key driver. This move adds scale in western markets and diversifies the company’s geographic mix, reducing dependence on a single region. As these assets ramp up, HSBC expects both volumes and margins to improve.
Valuation adds to the appeal. Nuvoco trades at a meaningful discount to peers on forward estimates, which HSBC believes leaves room for rerating if execution and pricing improve as expected.
HSBC on UltraTech Cement: ‘Buy’
UltraTech Cement remains a core ‘Buy’ in HSBC’s coverage with a target price of Rs13,750, indicating a 27.7% upside.
The brokerage sees the company as well placed to benefit from an improving industry structure. After a phase of aggressive expansion and acquisitions, the focus is expected to move toward better utilisation and margin improvement.
UltraTech’s scale gives it an advantage in managing costs and capturing pricing gains when the environment turns favourable. HSBC also expects the company’s balance sheet to strengthen as debt levels decline over time.
“Earnings should improve as the supply and demand environment improves,” HSBC says, referring to leading players including UltraTech.
The report also notes that consolidation led by large players is gradually improving discipline across the sector, which should support profitability.
HSBC on Ambuja Cements: ‘Buy’
Ambuja Cements is another high-conviction idea for HSBC, with a ‘Buy’ rating and a target price of Rs 590, implying a 44.8% upside.
The brokerage expects earnings to strengthen as recently added capacities stabilise and utilisation improves. Ambuja has expanded significantly in recent years, and HSBC believes the benefits of that investment phase will begin to show more clearly in the coming years.
Management commentary around a greater focus on returns rather than just expansion is seen as a positive. This approach, HSBC argues, should support better margins.
“Focus on value and profitability should benefit the industry,” HSBC adds, citing company commentary including that of Ambuja.
With improving pricing and operating leverage, the brokerage expects Ambuja to deliver stronger earnings growth over the medium term.
HSBC on Dalmia Bharat: ‘Buy’
HSBC has maintained a ‘Buy’ rating on Dalmia Bharat with a target price of Rs 2,490, suggesting a 38.9% upside.
The company is seen as a direct beneficiary of improving pricing trends in East India, where it has a strong presence. As excess capacity in the region eases, HSBC expects both realisations and profitability to improve.
The brokerage also points to regional pricing recovery as a key driver of earnings growth for Dalmia over the next few years.
“Region-specific pricing improvement should drive earnings growth,” HSBC says in its sector assessment.
Alongside improving fundamentals, Dalmia’s valuation remains relatively attractive, which HSBC believes could support further upside as earnings visibility strengthens.
Conclusion
HSBC’s sector view rests on a simple but important change. Capacity additions, which have weighed on pricing for several years, are expected to peak in FY27 and slow thereafter. At the same time, demand is projected to grow at a steady 6% to 7%, supported by infrastructure spending.
That combination is expected to improve utilisation levels and strengthen pricing, lifting margins across the sector.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
