Buy Ultratech Cement; target of Rs 13,625: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on Ultratech Cement

We upgrade Ultratech Cement (UTCEM) to ‘BUY’ as we expect cement pricing to improve from Jan’26 led by strengthening demand and impending pressure on industry margins due to current weak prices & elevated pet coke prices. The stock has also corrected ~11% from Aug’25 on account of muted demand amid monsoon and GST rationalization limiting price hikes. Cement demand momentum has improved in H2FY26, aided by rural housing, commercial and urban housing demand. While several infrastructure projects have been announced, activities have been muted post monsoon. Capex on roads has been growing from Sep’25 as per recent GoI spending data. We expect demand to improve across regions as GoI spending on infrastructure improves over next few months. Key regions such as South and East where stable governments have been formed recently are expected to drive this growth; while demand from North, Central and West would remain stable. This would reduce the gap between non-trade and trade prices, which has increased in recent months. Trade prices have been largely stable. While weak rupee and higher pet coke prices are expected to impact industry margins, UTCEM would benefit from higher coal share, logistics optimization aided by expanded manufacturing footprint, and synergy benefits of integration of acquired capacities.

Outlook

We expect UTCEM volumes to clock ~12% CAGR over FY25-28E on the back of superior execution and ramp up of recent inorganic expansion. We have tweaked our estimates by -6%/-1%/+4% for FY26/27/28E on near-term weak cement pricing while maintaining volume assumptions. We expect EBITDA to deliver strong 24% CAGR over FY25-28E. The stock is trading at EV of 16.4x/14.1x FY27E/28E EBITDA. We upgrade the stock to ‘BUY’ from ‘Accumulate’ with revised TP of Rs13,625 (Rs13,425 earlier) valuing at 18x EV of Sep’27E EBITDA.

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Ultratech Cement - 22122025 - prabhu