>CEMENT SECTOR: Earnings and target price upgrades

The cement sector has witnessed strong recovery in prices as rationality has prevailed. We believe

that the worst is behind us, with trough operating performance witnessed in 2HCY10. Long-term

demand drivers are intact, which would ensure return of normal growth. We are upgrading our

FY12 estimates by 2-18% to partly factor in for current prices. However, sustenance of discipline and current prices in FY12 could drive further upgrades of 9-33%. Valuations are attractive and offer a good entry point for the next upcycle. We prefer Ambuja Cements, JP Associates and Grasim among large-caps, and Birla Corp and India Cements among mid-caps

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