UltraTech Cement Ltd. reported June-quarter earnings that prompted global brokerages to raise their target prices after the country's largest cement maker delivered stronger-than-expected volume growth, resilient pricing and higher profitability despite the monsoon season.
Brokerages said the quarter reflected continued market share gains without compromising realisations, while better pricing, improving operating profitability and sustained capacity expansion strengthened the earnings outlook. Management's commentary that cement prices have remained stable through the monsoon and its expectation of double-digit volume growth in FY27 also supported analysts' positive stance.
The company reported double-digit growth in revenue, operating profit and net profit, while operating EBITDA per tonne improved year on year despite a marginal contraction in EBITDA margin.
UltraTech Cement Q1 Highlights (Consolidated, YoY)
- Revenue rose 15.8% to Rs. 24,648 crore from Rs. 21,276 crore.
- EBITDA increased 13.7% to Rs. 5,015 crore from Rs. 4,411 crore.
- EBITDA margin stood at 20.3% versus 20.7%.
- Profit rose 16.9% to Rs. 2,600 crore from Rs. 2,225 crore.
Domestic sales volumes increased 13.1% year on year to 39.2 million tonnes, while grey cement volumes rose 12.2% to 41.3 million tonnes. Capacity utilisation stood at 81% on domestic grey cement capacity of 200.1 million tonnes per annum. Operating EBITDA per tonne improved to Rs. 1,214 from Rs. 1,198 a year earlier.
UltraTech crossed the milestone of 200.1 MTPA domestic grey cement capacity and 205.5 MTPA global capacity during the quarter. The company plans to add 15.9 MTPA of capacity in FY27 and another 29.8 MTPA in FY28.
The company also highlighted the turnaround at India Cements Ltd., which reported a profit of Rs. 52 crore in the June quarter against a loss of Rs. 183 crore a year earlier. India Cements' sales volumes grew 18.5% year on year.
Here's what brokerages are saying after UltraTech Cement announced Q1 results
Jefferies
- Maintained 'Buy'; target price raised to Rs. 14,065 from Rs. 14,050
- Said UltraTech remains "ahead of the pack".
- Strong execution on EBITDA and volume growth.
- EBITDA supported by double-digit volume growth and better pricing.
- Management expects pricing to remain stable through the monsoon.
- Expects double-digit volume growth in FY27 with modest EBITDA per tonne expansion.
Goldman Sachs
- Maintained 'Buy'; target price raised to Rs. 13,500 from Rs. 13,160
- Called the quarter strong and said the incumbent is growing like a challenger.
- Superior volume growth and better pricing drove earnings.
- Said cement prices have remained firm in Q2 despite the monsoon.
- Expects 16% EBITDA CAGR over the next two years.
Morgan Stanley
- Maintained 'Overweight'; target price raised to Rs. 14,700 from Rs. 14,600
- Said UltraTech continues to gain market share without compromising realisations.
- Middle East-led cost inflation remains a challenge.
- Said demand trajectory after the monsoon is the key monitorable.
CLSA
- Maintained 'High Conviction Outperform'; target price raised to Rs. 14,000 from Rs. 13,800
- Said UltraTech beat expectations on all fronts.
- Cost guidance surprised positively.
- Profitability remained better than expected.
- Management reiterated a strong growth pipeline.
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