Motilal Oswal 's research report on UltraTech Cement
UltraTech Cement (UTCEM)’s result highlights the execution of its planned cost rationalization and de-leveraging roadmap. Despite negative operating leverage (volumes down 32% YoY), the company reported the highest ever EBITDA/t of INR1,416, led by cost reduction across heads of expenditure. Net debt also declined by INR22b (13%) QoQ to INR147b (1.7x EBITDA). We raise our consolidated PAT estimate by 23%/11% for FY21/FY22 after factoring lower operating costs as well as lower finance cost (on account of faster de-leveraging). Besides strong FCF, non-core asset sales should further aid de-leveraging. Reiterate Buy.
The stock is also trading 35% cheaper than peer Shree Cement v/s the historical average of 10%. We value UTCEM at 13x FY22E EV/EBITDA to arrive at TP of INR4,830. Reiterate Buy.
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