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This Brokerage has Placed A “Buy” Call On Ultratech Cement


Brokerage firm, Motilal Oswal has placed a "buy" call on Ultratech Cement, with a price target of Rs 4,305, in its latest research report.


"Ultratech Cement's result instills confidence in its planned cost-rationalization and deleveraging roadmap. Despite lower operating leverage (volumes down 16% year-on-year), operating cost per ton increased only 1 per cent, year-on-year (-2% quarter-on-quarter) which coupled with better realization drove a 14% year-on-year (and 13% quarter-on-quarter) increase in EBITDA/t to Rs 1,138. Strong FCF helped the company reduce net debt sharply to Rs 169 billion (implying 1.55 times net debt/EBITDA).

This Brokerage has Placed A “Buy” Call On Ultratech Cement

We expect net debt to decline further even in FY21 as the company has curtailed capital expenditure and seeks to reduce operating cost as well.

The valuation is also attractive at 10.9 times FY22E EV/EBITDA and USD134/tonnes of capacity, a 35% discount to the past five-year average and 20% discount to the past 10-year average. The stock is also trading 30% cheaper than peer Shree Cement v/s the historical average of 10 per cent. We value UTCEM at a 13x FY22E EV/EBITDA to arrive at a target price of INR4,305. Reiterate Buy," the firm has said in its research report.


The stock of Ultractech Cement was last trading at Rs 3539 on the National Stock Exchange.

Read more about: ultratech cement
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