Nirmal Bang, a research firm, has stated that the cement sector has gradually started to gear up for the cyclical upturn in the next two years.The key reasons behind its view are narrowing demand-supply gap (incremental demand of 38 mt and slowdown in incremental capacity with effective addition of 25mt), likely improvement in effective capacity utilisation to 80 per cent by FY14E and moderation in cost inflation. All this would lead to improvement in operating profit and a re-rating of the valuation multiple.Hence, investors should accumulate cement stocks in order to derive the benefits from upturn in the cement cycle. The company initiate coverage on six companies in the cement universe with a buy rating on Ambuja Cement, ACC, Grasim Industries, India Cements and Shree Cement and a hold rating on UltraTech.The company said that in FY08-12, the cement industry’s installed capacity increased by 140 mt and incremental demand increased by just 55 mt. This led to an unfavorable demand-supply scenario and effective capacity utilisation rate declined from 96 per cent in FY09 to 76 per cent in FY12.