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We expect some upside in major cement companies' Stocks next week, due to positive near-term outlook for the sector, they expect the recent rally in most cement counters to cap the rise. The rise may be capped as many cement counters are seen overvalued. Sentiment for stocks of cement companies has remained positive for the past few months due to the recent uptick in demand across the country. Additionally, cement companies' performance during Oct-Dec is seen robust due to a low base.
We prefer ACC as current high valuations for companies in the sector have left little room for further out performance for stocks like UltraTech Cement and Ambuja Cements. With the increase in demand, companies have been able to raise prices of the commodity, which will help them post higher realisation on sales despite high input costs. We continue to be positive on the sector from a medium-to-long term perspective and prefer companies based on fundamental strong.
