UltraTech Cement has delivered a strong financial performance in the March quarter, but its stock could not hold ground. On Tuesday, share price of UltraTech Cement fell nearly 2, even as the company reported a 10% year-on-year jump in net profit to Rs 2,482 crore and a 13% rise in revenue to Rs 23,063 crore.
While the numbers were good, the market had already priced in high expectations. Analysts say that muted operating margins and flat profitability per tonne (EBITDA/t) left little room for a surprise. Add to that the ongoing volatility in cement prices, and investors decided to book profits.
Let’s take a look at how brokerages like Motilal Oswal, JM Financial, and Nuvama are viewing the company
Motilal Oswal on UltraTech Cement: ‘Buy’, focus on long-term strength
The brokerage house, Motilal Oswal remained bullish and reiterated its ‘Buy’ rating with a target price of Rs 13,900.
“We estimate a CAGR of 15%/29%/34% in consolidated revenue/EBITDA/PAT over FY25-FY27, aided by inorganic growth,” the brokerage said.
According to the report, UltraTech is set to benefit from strong infrastructure demand, better pricing, and its expanding scale of operations. The company’s recent acquisitions including Kesoram and India Cements are already showing signs of improving performance.
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The brokerage further in its report added that it expects UltraTech’s net debt to fall to Rs 105.3 billion by FY27, lower than Rs 176.7 billion in FY25, improving its balance sheet health.
JM Financial on UltraTech Cement: ‘Top Pick in the Sector’
JM Financial is also bullish and has named UltraTech its top pick in the cement sector. It raised its price target to Rs 13,500 (from Rs 13,000), based on 19x FY27E EV/EBITDA.
“UltraTech is poised for structural improvement in return ratios over the next 3-4 years owing to rising asset turnover, low cost of expansion, and improving profitability,” said the brokerage.
In FY25 alone, UltraTech added 43 million tonnes of grey cement capacity, and plans to increase this by another 27 million tonnes by FY27, pushing its total domestic capacity to 211 million tonnes.
The brokerage believes these capacity additions and cost efficiencies (Rs 300/tonne improvement expected) will boost profitability and market share.
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