UltraTech Cement rises 2% post Q4 results; analysts mixed

Moneycontrol Bureau

Shares of UltraTech Cement rose 2 percent intraday on Monday despite a decline in net profit of March quarter. The company’s net fell 24 percent to Rs 657.2 crore for the fourth quarter of 2014-15 due to a a penalty imposed by Competition Commission of India (CCI) on cartelisation charges.

Macquarie maintains an underperform rating on the stock with a target price of Rs 2020 per share. It states that due to the low base of FY15, volume assumptions for FY16 are looking very optimistic; more particularly amidst weak rural demand environment. The brokerage is concerned that with poor rains expected there may be a risk to recovery of cement demand from 5-6 percent in FY15 to estimate of 8 percent year-on-year in FY16.

“On the costs front, benefits of lower oil prices are already factored in and going forward, we expect costs to trend upwards with increase in excise duty nd higher freight announced in the recent budget. Further, MMDRA amendment doubles limestone royalty and would increase cost by Rs 5-6 per bag,” it says in a report.