Buy UltraTech Cement; target of Rs 8700: ICICI Direct

ICICI Direct's research report on UltraTech Cement

UltraTech is the largest cement manufacturer in India with a domestic capacity of 111.4 MT (23% of total market) with a leadership position in most regions (excluding east). It has grown through organic and inorganic routes and added around ~30 MT of capacity in the last three years.It has shown its capability to successfully integrate the acquired assets and ramped-up its utilisations in a profitable manner The company is now focusing on fast growing market of eastern India, which accounts for 10.2 MT of its total 19.6 MT planned expansion over FY21-23E

Outlook

With a target to become net debt free by FY23E and expected RoCE of 17%+, we remain positive on company. Hence, we maintain BUY rating  We value UltraTech at Rs 8,700 i.e. 17x FY23E EV/EBITDA