UltraTech Cement Ltd. share price target

UTCEM reported an 8%/7% YoY growth in volume/blended realization. EBITDA margin declined by 339bp YoY to 22.6% due to energy cost inflation, which was further accentuated by higher maintenance and employee costs. EBITDA remained largely flat YoY at INR27.1b (-18% QoQ). Market share gains should continue, aided by the ongoing 20mtpa...

Ultratech Cement (UTCEM) Q1FY22 EBITDA was in-line with our estimate. Opex/t was largely flat QoQ but EBITDA/t was higher by 13% QoQ to Rs1571 led by price hikes. Q1FY22 UTCEM capacity utilization stood at 73% with June-21 month utilization at 74%. UTCEM re-iterated its plan to expand capacity by 19mt to reach 136mt by FY23E. UTCEM's balance sheet continues to remain lean and Net Debt/ EBITDA at 0.44x vs 0.55x QoQ. Post the result we have maintained our estimate and revised our TP to Rs7362 (valuing the company at 15x FY23E EV/EBITDA versus 13x earlier). From valuation perspective we are valuing at its peak (exhibit 10) to arrive at TP. But given nil...

The new organic capacities are being added at lower capital cost (US$60/t) that will help in boosting return ratios (to generate 16-18% IRR) Despite capex plans, the company also aims to become net debt-free by FY23E supported by strong operating cash flows (from existing and acquired assets) and through efficient w/cap management...

Earnings upgrade drives increase in TP by 11% UTCEM reported strong set of Q4FY21 earnings with 12% beat on our/consensus EBITDA estimates. The beat was largely led by better realisations and lower costs. EBITDA/t increased 9% YoY (+17% QoQ) to Rs1,590 (PLe:Rs1,420). Led by higher realisations and better control on freight cost, we increase our EBITDA/EPS estimates for FY22e and FY23e by 8.3%/12.8% and 7.0%/9.9% respectively. UTCEM successfully integrated acquired operations of Century cement...

Net sales (including other operating income) of UltraTech Cement has increased 54.21% to Rs 11829.84 crore. Operating profit margin has jumped from 27.08% to 27.96%, leading to 59.19% rise in operating profit to Rs 3,307.49 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 11.32% to 12.74%. Purchase of finished goods cost...

Ultratech Cement (UTCEM) Q4FY21 EBITDA was higher than our / consensus estimate by 23% / 17%. Beat in number is driven by higher volume growth and lower costs. UTCEM has gained market share in FY21 as it reported cement sales volume growth of 6% YoY versus industry volume declined by 12% YoY for FY21. In Q4FY21, UTCEM witnessed uptick in the plant utilization in every month of Q4FY21 with March-21 month plant utilization of 90%+. Post the result we have factored better than expected result in FY22/23E. This has resulted in increase in the EBITDA by 5-6% over FY22-23E (refer Fig 9). Revised TP is Rs6,120 (earlier Rs5,744) based on unchanged 13x FY23E...

Target capacity of 160 MT by FY30E; to reach 131 MT by FY23E The target of reaching 160 MT by FY30E from 111.4 MT indicates capacity CAGR of 3.7% in FY20-30E. The newly announced cement capacity expansion of 12.8 MT (9.1 MT clinker capacity) along with ongoing capex of 6.7 MT would take its total capacity to 130.9 MT by the end of FY23E. Region wise, major capacities are being added in the eastern and central region (73% of 19.5 MT), which has lowest road and power density per capita representing higher growth potential while rural population share remains...

steady cash flows, UTCEM embarks on next round of growth with 19.5mnt of new capacities along with sizeable investment in high payback and environment friendly renewable power (WHR) to increase its share to 34% by FY24 from current 13% of overall power requirement. Led by its dominant size (22% market share) and highly efficient operations, we believe that UTCEM stands out as the best candidate to play the sector. We reiterate BUY with TP...

Market share gains should continue, aided by the ongoing 20mtpa expansion program, which should drive 11% volume CAGR over FY21-24E. While we expect industry volumes to decline by 25-30% in the near term due to COVID-related lockdowns, the same should be partly compensated by improved margins as prices have been strong. Our earnings estimates for UTCEM for FY22-23E are therefore broadly unchanged. We estimate 19% EPS CAGR. The company remains our top largecap pick in the sector. Lower cost drives 10% beat on EBITDA (up 51% YoY)...

Revenues for Q3FY21 grew 17.4% YoY led by high rural and housing demand uplifting volumes (+14.0% YoY). EBITDA margin surged 680bps to 27.4% on improved cost efficiency...