Buy UltraTech Cement; target of Rs 14,700: Emkay Global Financial

Emkay Global Financial' research report on UltraTech Cement

We maintain BUY on UltraTech Cement (UTCEM) with TP of Rs14,700. KTAs from our analysis of UTCEM’s FY25 Annual Report: 1) Despite the weak pricing scenario (~7% YoY sharp decline in gray cement realization) in FY25, UTCEM posted a resilient EBITDA margin of ~16.5% (~18% in FY24) and EBITDA/t of Rs960 (Rs1,090 YoY). 2) It added 43mtpa (~30% of FY24 capacity base) in FY25, and is on track to surpass total capacity of 210mtpa by FY27, hence logging a strong ~70-75mtpa lead over Ambuja Cements (consol). 3) Leverage (FY25 net debt-to-EBITDA: 1.4x) in check despite heavy capex. We expect UTCEM to turn net cash by FY27E on the back of healthy cash flow generation and controlled capex. We maintain a positive stance on UTCEM (our top sector-pick) led by 1) healthy pricing environment in FY26TD, 2) visible turnaround in India Cements coupled with a strong EBITDA/t (Rs800 by FY27) guidance, 3) commitment to deliver >Rs300/t (already achieved Rs86/t in FY25) operational cost rationalization.

Outlook

We believe the likely GST rate-cut could accelerate market share gains in the medium term. We value UTCEM at 19x Jun-28E EV/EBITDA with TP of Rs14,700.

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