Brokers’ Call: Citi upbeat on cement cos

Citi is positive on Indian cement companies but has downgraded Ultratech to ‘Neutral’. The foreign brokerage has assigned ‘Buy’ ratings on Grasim, Ambuja and ACC citing better producer pricing power and outlook.3

“We remain constructive on the India cement sector. While oversupply persists, narrowing of the demand supply gap has helped producers raise prices. We expect capacity utilization to trend up and historical trends suggest pricing follows an upward trajectory as utilization improves,” the Citi report said.

The brokerage has downgraded Ultratech to neutral as it has rallied 60% in the last one year.

“We expect demand to rise by 7% in FY13 and 8% in FY14. The worst period of oversupply is behind us and pricing trends indicate that producers have been controlling output in line with demand trends,” the Citi report said.