Most analysts hiked their target for UltraTech Cement Ltd. stock price anticipating a pickup in demand after heaviest monsoons in 25 years.
The Aditya Birla Group company's quarterly profit rose 72.3 percent over the previous year, missing estimates while volumes dropped 1 percent year-on-year to 17.2 million tonnes.
Meanwhile, analysts remained cautious on UltraTech's turnaround plan for the newly acquired Century Textiles & Industries Ltd. plants by next fiscal.
Here's what the brokerages have to say about UltraTech's second-quarter performance:
Morgan Stanley
- Maintain ‘Overweight' rating; hiked target price to Rs 5,000 per share from Rs 4,760.
- Management expects turnaround in Century unit over six-12 months.
- Century to break even in profit-before-tax over 12 months.
- Expect volume growth to improve in second half of fiscal.
- Announcement of expansion plans in east India surprising.
HSBC
- Maintain ‘Reduce' rating with target price unchanged at Rs 3,520 per share.
- Standalone performance (barring Century unit) was weaker than expected.
- Century unit's Q2 performance was disappointing.
- Century plants running at 48 percent capacity in Q2FY20 vs 64 percent in previous year.
CLSA
- Maintain ‘Buy' rating; target price hiked marginally to Rs 5,500.
- Good second-quarter results but Century Textiles' unit makes comparison difficult.
- Deleveraging is key; despite which expansion of 3.4 million tonne capacity approved in east India.
- Don't see concern for balance sheet given strong profitability trend.
- Century's unit Ebitda guidance of Rs 400-500 per tonne for second half of fiscal looks conservative.
Citi
- Maintain ‘Buy' rating; reduces target price from Rs 5,300 to Rs 5,130 due to uncertainty over Century business.
- Expect demand and price improvement after Diwali.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
