ICICI Securities research report on UltraTech Cement
The 20% volume surge reported by UltraTech Cement in Q1FY24 failed to drive EBITDA growth (down 1.5% YoY). EBITDA/te dipped 3% QoQ (~7% below consensus and in line with our estimate) due to: a) realisation decline of 0.4% QoQ, b) variable cost/te being flat QoQ despite low fuel prices, and c) fixed cost/te rising 10% QoQ. The volume surge is driving ~5% upward revision to our FY24E EBITDA, but we see little merit in arguing for an upward revision to FY25E EBITDA given that volume growth can be at risk
Outlook
Given the underlying competitive intensity and historical precedence of fuel cost drop failing to drive up EBITDA/te, we see little scope for increasing our valuation multiple of 15x FY25E EV/EBITDA. Maintain REDUCE with a target price of INR 7,311 (earlier: INR 7,295).
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