Stocks to buy: Jefferies recommends top 3 cement stocks as India’s cement sector poised for strong earnings growth

Stocks to buy: India’s cement sector looks like it’s on the rise again. According to Jefferies, a global brokerage firm, prices are holding up better than expected, and there’s a chance that taxes on cement might come down soon. Both factors could help the industry grow and make more money in the coming months.

Usually, during the monsoon season — when construction activity slows — cement prices tend to drop. But in August, prices barely budged, falling only 0.6 per cent. That’s surprisingly strong, especially since prices have actually gone up almost 6 per cent since the start of the new financial year, which is more than what Jefferies initially predicted.

Dealers across different parts of the country are already seeing companies planning to increase prices by around Rs 30 per bag, which is roughly an 8 per cent hike, according to Jefferies.

GST Cut Could Be a Real Boost

There’s some buzz about the GST Council possibly cutting the tax on cement from 28 per cent to 18 per cent. If that happens, it would lower costs for builders and homebuyers, which could push up demand.

This kind of tax relief would help both the manufacturers and the end consumers — more affordable cement means more projects getting off the ground, especially in housing and infrastructure.

Cement Companies Are Ready for Growth

Over the past few years, many cement companies have invested heavily in expanding their production capacity and upgrading their logistics. They’ve also embraced new technology to become more efficient.

With raw material prices steadying and companies able to raise their prices a bit, margins (or profits) should improve in the near future. Plus, government infrastructure projects and a pick-up in real estate construction should keep demand strong.

Top Cement Stocks to Watch

Jefferies has singled out three companies as favorites:

UltraTech Cement: The biggest player with a vast network and solid financial health.

Ambuja Cement: Well-known brand with a strong distribution setup.

JK Cement: Growing steadily in smaller towns and expanding capacity.

What This Means for Investors

Looking ahead, the next 6 to 12 months look promising for the cement sector. If prices go up as expected and the GST cut happens, companies could see good profit growth.