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The cement sector has been under pressure for a while as there has been volume and pricing pressure since a couple of months ago due to international trade and raw material availability. However, Rakesh Arora, founder of Goindiastocks.Com believes the sector will soon start picking up. Within the basket, he is positive on Ambuja and ACC cement.

“Petcoke prices have (now) come down. Diesel prices are coming down, so the worst is already behind us and the cement prices are up Rs 25-30 per bag from where they were. So the cost will come down but the prices will stay. So I am very bullish on the cement sector,” he said.

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He expects EBITDA per tonne to move towards Rs 1,400 per tonne versus its earlier average of Rs 1,000 per tonne. “This makes for a bull case,” he said.

Between large-cap and midcap cement stocks, he prefers Ambuja Cements and ACC.

“Among the large-caps, you have Ambuja Cement and ACC, which is seeing a change of hands and the only difference between them and UltraTech was the growth option,” he mentioned.

He expects ACC and Ambuja to deliver solid growth post change of promoter and to rerate post this change of guard.

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Historically, cement prices never come down once it reaches a particular level. It is going to bounce out around that level. “So I am very bullish that margins will expand,” he said.

According to him, one should focus on large-cap cement names versus smallcap and midcap cement stocks.

For the full interview, watch the accompanying video

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(Edited by : Abhishek Jha)