UltraTech Cement Q3 Review — Motilal Oswal Retains 'Buy' On Robust Volume Growth; Positive Demand Outlook

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Motilal Oswal Report

UltraTech Cement Ltd.’s Q3 FY25 operating performance was in line with our estimate, with Ebitda standing at Rs 28.9 billion (declined 11% YoY). Ebitda/tonne stood at Rs 951 (-20% YoY; versus estimate Rs 925). Operating profit margin contracted 2.7pp YoY to ~17% (est. ~16%). Adjusted PAT declined ~17% YoY to Rs 14.7 billion (+14% vs. our estimate, led by higher other income and lower effective tax rate).

Management highlighted that its domestic grey cement capacity is expected to increase to ~185 mtpa by end-FY25 (including India Cements and Kesoram). The company is expected to post double-digit volume growth in FY26 vs industry growth at ~6-7% YoY.

The capacity utilization is estimated at ~80-85% on expanded capacity in FY26. With the acquisition of India Cements and Kesoram, the company’s capacity share is likely to increase to ~30% in the South region. It believes both assets (India Cements and Kesoram) have scope for improvement in capacity utilization.

We have incorporated India Cements in the company’s consolidated earnings estimates from Q4 FY25 and Kesoram cement assets from FY26E. The stock trades at 20x/16x FY26E/FY27E EV/Ebitda. We value UltraTech at 20 times FY27E EV/Ebitda and arrive at a target price of Rs 13,800. Reiterate Buy.

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