This Cement Stock Is Most Recommended By Brokerages; Check Details

Emkay Global Financial

In its research report dated August 06, 2021, Emkay Global Financial suggested a buy rating on Ultratech Cement with a target price of Rs 8500.

"We have a Buy rating on the stock with a DCF-based TP of Rs8,500 (Sep'22E), implying a 15x forward EV/EBITDA (vs. current multiple of 16x).

According to the brokerage, Ultratech identified the following important pillars of its growth strategy:

1) increase balance sheet strength and return ratios
2) focus on cost optimization and efficiency gains
3) low-cost expansion, mostly through brownfield expansion.

"We predict that increasing the share of green electricity, improving the blended ratio, lowering the lead distance, and boosting operating leverage will result in sustainable cost reductions of Rs90-100/ton by FY24E," the brokerage added. 

ICICI Direct

In its research report dated July 23, 2021, ICICI Direct suggested a buy rating on UltraTech Cement with a target price of Rs 8700.

Outlook

"With a target to become net debt free by FY23E and expected RoCE of 17%+, we remain positive on company. Hence, we maintain BUY rating  We value UltraTech at Rs 8,700 i.e. 17x FY23E EV/EBITDA ," the brokerage said.

UltraTech is India's largest cement manufacturer, with domestic capacity of 111.4 MT  and market supremacy in most regions. In the previous three years, it has increased roughly 30 MT of capacity through organic and inorganic ways. It has demonstrated its capacity to successfully integrate acquired assets and ramp up usage in a profitable manner. The corporation is now concentrating on the fast-growing market of eastern India, which accounts for 10.2 million tonnes of the total 19.6 million tonnes of expansion projected for FY21-23E.

Sharekhan

Sharekhan advised a buy rating for UltraTech Cement, with a target price of Rs 8800.

Outlook

"We maintain a Buy rating on UltraTech Cement (UltraTech) with a revised PT of Rs. 8,800, factoring upwardly revised estimates led by sustained healthy demand environment over FY2022-FY2024." the brokerage has said.

UltraTech continued to surprise pleasantly on the operating front in Q1FY2022, boosted by solid volume growth, which was visible despite the COVID-19 impact in Q1FY2022, a rise in cement prices, and lower operating expenses. In the first quarter, net debt continued to decline. In addition, a significant debt was paid off in July 2021. The plans to turn net cash in FY2024 and add 19.5MTPA by FY2023 are still on track. Demand for rural and urban real estate, as well as significant infrastructure projects, is projected to stay strong.

Motilal Oswal

Motilal Oswal suggested a buy rating on UltraTech Cement with a target price of Rs 8770.

Outlook

"The valuation is reasonable at 13.7x FY23E EV/EBITDA - a 10% discount to its last five years' average. We value UTCEM at 16x FY23E EV/EBITDA to arrive at TP of INR8,770. Reiterate Buy," the brikerage has said.

In 1QFY22, UltraTech Cement (UTCEM) continues to increase its costs and margins, reporting the highest EBITDA/unit of INR1,536/t (+8% YoY) in the company's history. This, combined with a 47 percent YoY increase in volume, resulted in a 59 percent YoY increase in EBITDA. QoQ, net debt dropped by INR7 billion to INR59.8 billion (0.44x TTM EBITDA). The continuing 20mtpa growth program, which is expected to deliver a 13 percent volume CAGR over FY21-24E, should help maintain market share gains. We enhance our EPS forecast for FY22E/FY23E by 6%/6%, based on a higher realisation expectation. Over FY21-23E, we anticipate a 26 percent EPS CAGR.

This Cement Stock Is Most Recommended By Brokerages

Disclaimer

The article is informational in nature, which is taken from the various brokerage reports. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.