“The only stock that I am pushing or positive about is Grasim. I think that stock continues to do extremely well. My first and foremost argument there is that high dividends from UltraTech will clearly continue, which will benefit Grasim either in the form of reduced leverage or to be deployed in other high growth business,” he said.
The visibility of recurring dividends from UltraTech supports a lower holding-company discount for Grasim. He has cut the discount from the historical 40–50% range to 25%, which gives him a target price of ₹4,175, implying an upside potential of 27% from the current price.
He also expects the paints and business-to-business (B2B) e-commerce businesses to move towards break-even, with B2B e-commerce potentially reaching that point earlier.
He said investors who remain positive on cement can also consider playing the sector through Grasim.
The broader cement industry, however, is facing pressure on prices. Recent price increases in south India are largely aimed at preventing prices from falling further rather than delivering a meaningful improvement in realisations. Sahadeo expects cement realisations to decline by 1–1.5% sequentially in the July-September quarter of 2026 (Q2FY27).
“Q2 typically has the negative impact of operating leverage also,” he said, referring to the impact of lower seasonal volumes. Higher fuel costs are another pressure point, with Sahadeo estimating a ₹100–115 per tonne impact from fuel costs alone. Combined with weaker volumes, this could pull down earnings before interest, taxes, depreciation and amortisation (EBITDA) per tonne by ₹200–250 sequentially in Q2.
Profitability should improve in the second half as demand picks up, but Sahadeo expects the full-year picture to remain largely flat. Industry EBITDA per tonne could be flat or rise only marginally year-on-year.
Cement demand is also unlikely to see a sharp acceleration. Sahadeo expects all-India demand growth of around 6–7% this year. He noted that despite repeated expectations of 7–8% annual growth, actual cement demand growth between 2010-11 (FY11) and 2025-26 (FY26) was only about 5.5% compound annual growth rate (CAGR).
Watch the full convesation here
“I’m still saying you’ll close the year anywhere between 6 to 7%, no real reason to expect a significant jump in demand,” Sahadeo said.
Catch all the latest updates from the stock market here
