Buy UltraTech Cement; target of Rs 8600: Motilal Oswal

Motilal Oswal is bullish on UltraTech Cement recommended buy rating on the stock with a target price of Rs 8600 in its research report dated May 09, 2023.

Broker Research

May 12, 2023 / 23:17 IST

Buy

Motilal Oswal's research report on UltraTech Cement

UltraTech Cement (UTCEM)’s domestic grey cement capacity/volume CAGR at 10%/11% over FY14-23 exceeded that of industry (at 5% each) over the same period. This resulted in a considerable market share gain to ~26% in FY23 from ~16% in FY14. In FY23, UTCEM’s volume growth of 14% YoY exceeded that of industry at ~10% YoY. UTCEM commissioned 12.4mtpa grey cement capacity and 8.1mtpa clinker capacity (part of phase-I expansion) in FY23, spread across North, East, West and Central India. In Apr’23 it commissioned 2.2mtpa grinding capacity at Patliputra, Bihar (brownfield expansion and part of Phase-I). Currently, its total domestic grey cement capacity has increased to 129.2mtpa and clinker capacity has risen to 86.2mtpa. Remaining capacity under Phase -1 expansion ~2mtpa is under trial-run and will be commissioned in 1QFY24.

Outlook

The stock trades at 16.2x/13.9x FY23E/FY24E EV/EBITDA (v/s its 10-year oneyear average EV/EBITDA of 15.7x). We value UTCEM at 15.5x FY25E EV/EBITDA to arrive at our TP of INR8,600 (implying EV/t of USD200). We maintain our BUY rating on the stock.

For all recommendations report, click here