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Motilal Oswal Report
UltraTech Cement Ltd.'s Q4 performance was ahead of Motilal Oswal estimates, mainly driven by better cost savings. The company believes cost headwinds due to the Middle East conflicts are manageable in the near term with multiple levers and partially through the price hike taken so far.
The brokerage estimate a compound annual growth rate of 13%/15%/18% in consolidated revenue/Ebitda/PAT over FY26-28.
Motilal Oswal estimates its consolidated volume CAGR at ~10% and Ebitda/tonne of Rs 1,136/Rs 1,216 in FY27E/FY28E vs Rs 1,103 in FY26.
Operating profit margin is estimated to expand 80bp to ~20% by FY28 (vs ~19% in FY26).
Motilal Oswal estimates its net debt at Rs 17,840 crore in FY27 (to be peaked out) vs Rs 14,690 crore in FY26. The net debt-to-Ebitda ratio is estimated to remain below 1.0x.
The brokerage estimates its RoE/RoCE to increase to ~14%/12% by FY28 from ~11%/10% in FY26, backed by a rise in profitability and lower cost for ongoing expansions.
The stock is currently trading at 19x/16x FY27E/FY28E EV/Ebitda.
Motilal Oswal values UltraTech Cement at 18 times FY28E EV/Ebitda to arrive at a target price of Rs 13,800. Reiterate Buy.
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