UltraTech Cement Ltd. share price target

Increasing Scale Efficiently; Maintain BUY

Higher single digit volume growth with 80%+ capacity utilisation aids UTCEM's revenue growth despite realisation dent in a challenging Q1

It is heartening to see UltraTech Cement (UTCEM) ‘walking-the-talk’ on cost rationalisation. Within a quarter of its guidance to prune cost by INR 200–300/t (over three years), it has begun to deliver on – lead distance reduction, increased share of green power and lowering the clinker factor.

UltraTech Cement’s consolidated EBITDA stood flat YoY/declined 26% QoQ to Rs30.4bn, missing our/consensus estimates by 4%/11%, respectively, mainly due to one-time higher marketing spends which the management expects to normalize going forward.

UltraTech Cement (UltraTech) reported an in-line standalone revenues at Rs. 17,532 crore (up 1.7%
y-o-y) led by volume growth of 6.5% y-o-y while blended realisations were lower 4.6% y-o-y.

We maintain a Buy on UltraTech with a revised PT of Rs. 13,000, considering long-term growth potential led by structural demand drivers.

UltraTech Cement (UTCEM) has purchased ~23% stake in South-India major India Cements (ICEM) from investor Mr RK Damani and family for a cash consideration of ~INR 19bn (valued at ~USD 91 EV/t).