Accumulate Ultratech Cement; target of Rs 12,350: Prabhudas Lilladher

accumulate

Prabhudas Lilladher's research report on Ultratech Cement

Ultratech Cement (UTCEM) reported strong operating performance in Q3FY25 aided by higher volume growth (10.5% YoY) in domestic markets. Average realization inched up 0.5% QoQ as pricing remained muted till Nov’24. December exit prices are 1% higher than Q3 average and with some price hikes undertaken in January in Central & West regions, we expect Q4 to remain strong. As demand is expected to improve with higher GoI spends over next few months, pricing is expected to sustain. EBITDA/t improved 32% QoQ to Rs964/t aided by strong operating leverage and lower fuel costs. UTCEM consummated ICEM deal in Dec’24 and expects to improve its utilization to 70- 75% from c.57% over next few quarters. Although re-branding decision has not yet taken, mgmt. expects ICEM EBITDA/t to align with UTCEM over next two years. UTCEM expects Kesoram deal to get completed within Q4FY25 itself, which would drive FY26 volumes significantly.

Outlook

We expect UTCEM revenue/ EBITDA/ PAT to deliver CAGR of 13%/21%/25% over FY24- 27E. The stock is trading at EV of 18.9x/15.3x FY26E/FY27E EBITDA. Maintain ‘Accumulate’ with revised TP of Rs12,350 (earlier Rs12,145) valuing at 18x EV of Sep’26E EBITDA (earlier at 17x) as we believe UTCEM is best placed within cement space having superior execution and delivering faster than industry growth.

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Ultratech Cement - 24012025 - prabhu