Buy UltraTech Cement; target of Rs 14,600: ICICI Securities

ICICI Securities research report on UltraTech Cement

Industry leader UltraTech Cement (UTCEM) has made a convincing start to FY26 with Q1FY26 EBITDA surging 46% YoY (in line with our estimate) riding benefits of a) improved price environment, b) M&A benefits driving industry superior volume growth and c) sustained efficiency enhancement measures. The earnings momentum may pace up further tracking UTCEM’s commentary (echoed by our channel checks) of firm prices sustaining in the seasonally weak Q2. In our view, firm prices (at current levels) in Q2 have the potential to shore up FY26 consensus EBITDA (our estimates being ~11% higher vs. consensus). Further, it is heartening to see UTCEM walkingthe-talk with its efficiency enhancement measures across – reducing lead distance, rising CC ratio, increase in share of premium cement sales and higher share of green power. Factoring in these benefits, we revise up our FY27E EBITDA by ~4% (keeping FY26E broadly unchanged).

Outlook

We continue to value UTCEM at 19x FY27E EV/EBITDA and maintain BUY with a revised TP of INR 14,600.