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What should investors do with UltraTech Cement post Q1 earnings: buy, sell or hold?

UltraTech Cement's Q1 consolidated profit more than doubled to Rs 1,700.03 crore from Rs 793.08 crore in the year-ago period

July 23, 2021 / 09:35 AM IST
 
 
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UltraTech Cement share price touched a 52-week high of Rs 7,630, adding 2 percent in the early trade on July 23, a day after the company said its June quarter consolidated profit more than doubled to Rs 1,700.03 crore from Rs 793.08 crore in the year-ago period.

The cement maker’s revenue from operations jumped 54 percent year-on-year (YoY) to Rs 11,830 crore in Q1FY22 from Rs 7,671 in Q1FY21.

EBITDA for the quarter came at Rs 3,307.5 crore against Rs 2,077.7 crore YoY, while the EBITDA margin stood at 27.96 percent against 27.08 percent YoY.

Also Read: UltraTech Cement Q1 results beat estimates, profit more than doubles to Rs 1,700 crore

Here is what brokerages have to say about the stock and the company after the June quarter earnings:

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Macquarie | Rating: Outperform | Target: Rs 8,542

Macquarie has maintained outperform rating on the stock, as expansion projects are on track and expect industry-leading growth over FY21-24.

Sustained cost improvement and balance sheet deleveraging will support earnings and valuation.

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JPMorgan | Rating: Neutral | Target: Rs 6,890

The broking house remains neutral on the stock as the cost pressures are building up despite Q1 beat. The H2 needs large hikes for a positive surprise.

CLSA | Rating: Outperform | Target: Raised to Rs 8,000 from Rs 7,735

CLSA kept outperform rating on the stock as the Q1 EBITDA of 15 percent was above estimate but cost inflation will impact earnings.

The EBITDA/tonne increased 17 percent QoQ, which was above our estimate on lower costs.

CLSA expects profitability to taper down but the company is likely to turn net cash positive by FY24. Risk-reward seems fair at current valuation.

Prabhudas Lilladher | Rating: Buy | Target: Rs 8,600

The company reported a strong set of Q4FY21 earnings with a 12 percent beat on our/consensus EBITDA estimates. Led by higher realisations and better control on freight cost, we increase our EBITDA/EPS estimates for FY22e and FY23e by 8.3 percent/12.8 percent and 7.0 percent /9.9 percent.

Led by its dominant size (22 percent market share) and highly efficient operations, we believe that UltraTech stands out as the best candidate to play the sector.

Sharekhan | Rating: Buy | Target: Rs 8,800

UltraTech has been able to report strong volume growth which has been driven organically and in the wake of the COVID impact. The healthy pricing discipline and contained input costs have been improving its operational profitability, which is expected to improve going ahead.

Barring the near-term impact of the second wave of Covid, it has been one of the key beneficiaries of strong rural demand, pick up in urban real estate and large government infrastructure projects.

Motilal Oswal | Rating: Buy | Target: Rs 8,770

We estimate a 15 percent/26 percent CAGR in consolidated EBITDA/PAT over FY21–23E, driven by a 13 percent volume CAGR, better realisations, lower operating costs and lower interest costs.

At 0917 hours, UltraTech Cement was quoting at Rs 7,554.90, up Rs 95.05, or 1.27 percent on the BSE.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jul 23, 2021 09:35 am

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