Ambuja, ACC, UltraTech, Grasim, Nuvoco top picks for Citi

The firm has raised the target price to Rs 2,900 on ACC.

The top sells are Shree Cement and Ramco Cement.

The key outlay from Citi is that they believe that the pricing will remain subdued despite a significant scope for consolidation. The firm believes the nature of consolidation will be that smaller players will be bought out by larger names most likely by Adani Group. Adani’s ability to service debt at a reasonable EBITDA per tonne may not encourage price hikes. That's one bit.

Secondly, the belief that Adani Group’s ability to become the most efficient player by working out various cost levers will also mean that the focus will be on market share and not on pricing. So that's the second bit from that note.

Interestingly, they have identified 84 million tonne of acquirable assets, which potentially could be bought by larger players like Adani and the names include the likes of India Cement (they have a 17 million tonne capacity), Sanghi Cement (6 million tonne capacity), JK Lakshmi Cement (14 million tonne), Star Cement (6 million tonne), HeidelbergCement (close to 6.5 million tonne capacity) and Nuvoco (close to 24 million tonne capacity).

Jaypee has already announced selling their cement asset. That name is also included in the potential list.

This list is largely been calculated on the basis of balance sheets strengths, maybe a bit of foreign ownership or for that matter, the succession worries as well.

Broadly, the key changes are that the firm has upgraded Ambuja Cement to ‘buy’ and raised the target price there and has downgraded two stocks, which are JK Cement and Dalmia Bharat on the back of big consolidation happening.