The combination of strong demand and a decrease in commodity prices would help revive profitability in the Indian cement sector, according to Credit Suisse.

The research firm has said factors such as seasonality, maintenance, cyclical momentum of demand, regional disparities, and higher utilisation for sector leaders as all suggesting that capacity addition is need driven. "We build capacity addition run rate doubling to 40-45 metric tonne per annum from 20-22 metric tonne per annum," the note said.

ACC Ltd.

• The research house rated the stock 'neutral' with a target price of Rs 2,000, considering the steep fall in price and supportive valuation comfort despite the weak near-term macro environment.

• The upside can stem from benign cost pressures, volume pick-up from governmental spends, individual house builder segment and strong pricing power with the industry.

• The downside risk are weaker-than-expected demand, failure to maintain price discipline due to low industry utilisation rates, weakness persisting for longer-than-expectation and slow pick-up in demand after the lockdown or from slow ramp-up in infra projects

Ambuja Cements Ltd.

• The research house rated the stock 'neutral' with a target price of Rs 470, considering the comfort from reasonable valuations in light of the macro environment, limited growth outlook vs sector peers, near-term risks from elevated energy cost impacting margins and pricing power with changing competitive dynamics.

• The upside can emerge from falling energy prices, strong revival in demand, and margins can improve if industry can sustaining price hikes taken when commodities fall.

• The downside risk are weaker-than-expected demand and failure to maintain price discipline due to low industry utilisation rates or a higher-than-expected holding company discount for its ACC holding.

Shree Cement Ltd.

• The research house has set a target price of Rs 22,000 on Shree Cement with a 'neutral' rating, based on reasonable volume growth and cost trends as well as reduction in multiples relative to peers.

• The upside include demand growth being stronger than expected, at 8-10%, for the industry, cement prices being stronger than expected, lower input prices can be a surprise with crude prices coming down, and fast ramp-up of upcoming capacity and ability to perform well in new markets.

• Downside risk can emerge from valuation correction given it trades at a premium to Ultratech, despite correction in valuation over last several years.

• "Shree cement volume and profitability growth is getting aligned to sector leaders and thus it may not deserve significant premium," the note said

Ultratech Cement Ltd.

• The research house rated the stock 'outperform' with a target price of Rs 8,000, on the company's continued strength in the demand environment and the industry's ability to sustain higher prices along with some pull-back in commodities.

• The key upside are price discipline and stronger demand growth because of government spending.

• The downside include demand growth being weaker than expected, at low single digits, for the industry, cement prices being weaker than expected, correction in input prices can be negated by competition.