UltraTech, Ambuja, Dalmia & JK Lakshmi: Axis shares top 4 stock picks from cement space

Axis Securities on Thursday named UltraTech Cement Ltd, Ambuja Cements Ltd, Dalmia Bharat Ltd and JK Lakshmi Cement Ltd as its top conviction ideas in the cement sector, citing higher price realisations, strong demand, and capacity expansion plans. 

The brokerage has assigned ‘Buy’ ratings on all four counters, projecting potential gains of up to 28 per cent from current levels.

For UltraTech Cement, Axis Securities said the company’s capacity expansion is on track, with its total grinding capacity in India at 187 MTPA following the acquisition of India Cements’ assets. “The company plans to add a further 11 MTPA in FY26 and another 15 MTPA in FY27, bringing total cement manufacturing capacity to 212 MTPA. With expanded capacity and scale, the company is positioned to strengthen its market leadership, targeting a market share increase from 25 per cent to 28 per cent,” the brokerage said.

 It expects UltraTech’s EBITDA margins to improve to 22 per cent in FY27, aided by better volumes, realisations, and cost optimisation. Axis Securities has set a target price of Rs 13,840.

On Ambuja Cements, the brokerage said that the company is expanding capacity from 104.5 MTPA (including Orient Cement) to 118 MTPA by FY26, with plans to reach 140 MTPA by FY28. 

“Business initiatives are expected to further lower operating costs by reducing the clinker factor and logistics costs, improving the sale of blended cement, and expanding the EBITDA margins,” Axis Securities said, projecting margins of 20–21 per cent in FY27. It expects industry demand to grow 7–8 per cent in FY26. The target price for Ambuja Cements is pegged at Rs 660.

For Dalmia Bharat, Axis Securities said a fresh 6 MTPA cement unit and 3.5 MTPA clinker unit at Kadapa, along with a 3 MTPA bulk terminal in Chennai, to be operational by Q2FY28. 

“The earlier announced 6 MTPA capacity addition in Pune and Belgaum is progressing well and is expected to be commissioned by Q4FY27. With improved utilisation and incremental capacity, the company is projected to deliver a 7 per cent volume CAGR over FY25–27E,” it noted. EBITDA margins are expected to rise to 21–22 per cent over FY26–27. The brokerage has given the stock a target price of Rs 2,550.

On JK Lakshmi Cement, Axis Securities said ongoing capacity additions, including a 1.4 MTPA grinding unit in Surat with the first phase expected to commence in Q2FY26, and a 4.6 MTPA grinding unit along with a 2.3 MTPA clinker unit to be operational in phases over FY26–FY28.

 “These facilities are expected to boost market share, volume, and revenue growth,” it said. The brokerage projects volume and revenue CAGR of 8 per cent and 11 per cent, respectively, over FY25–27E, with EBITDA/tonne reaching Rs 1,000 by FY27. The target price for JK Lakshmi Cement is Rs 1,050.

On the sector outlook, Axis Securities said, “We remain positive as long-term demand drivers are intact and expect cement demand to grow at a CAGR of 7 per cent–8 per cent over FY24–27E. Sector consolidation is expected to benefit large players through economies of scale, supply chain efficiency, and better pricing in the long term. Despite ongoing capacity additions, we believe long-term cement demand will outpace supply.”