Why Midcap Cement Stocks Might Outperform Tier I Players: A Market Analyst's Perspective | ET Now

What exactly have you bought post the election verdict, which is 4th of June?
What we have been recommending is, say, a company like Sagar Cements, which is trading at, say, $50 kind of a valuation. Then, you have Birla Corporation, which we have been liking. Our sense is that next two years you should see improvement in their EBITDA per tonne. We have been recommending some of the infra names like, say, NCC, where we are comfortable in terms of margins largely remaining intact and double digit kind of growth. Then, we see a large hydroelectric opportunity unfolding and Patel is one company which looks rightly poised for this growth, there we have a target price of 80. So, these are some of the names which we have been recommending.
What is the reason you like cement and you like midcap cement?
When you look at the tier I players, it is not that we are not liking tier I. So, tier I if you look at, say, for example, between ACC and Ambuja, Ambuja is trading at 16 times EV by EBIDA, something similar what UltraTech is also trading.

But ACC is trading at about 10-11 times. So, our sense is that overall there is a great amount of difference between the tier I and tier II. And we feel that while the tide will improve for most of the players, but the upside is going to be larger in the midcap and smallercap names.


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