Birla Corp, UltraTech Among Dolat Capital's Top Stock Picks In Cement Pack After Q3 Results — Here's Why

Q3 FY25 Ebitda/tonne increased QoQ by Rs 200 (-Rs 380 YoY/+Rs105 QoQ excl. one-time incentive of Ambuja Cements) to Rs 882 mainly led by -2.3% QoQ (-3.3% YoY) in opex/tonne coupled with +1.8% QoQ (-7.6% YoY) in blended realization/tonne..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Dolat Capital Report.The cement sector in our coverage universe (13 stocks) reported marginal revenue increase of 0.2% YoY (+12.6% QoQ) at Rs 468.3 billion in Q3 FY25 led by +8.4% YoY (+10.6% QoQ) in volume to 87.4 mt, which was offset by -7.6% YoY (+1.8% QoQ) in blended realization/tn to Rs 5,358. Ebitda reported - 18.1% YoY/+43.1% QoQ to Rs 77.1 billion, however, blended Ebitda/tn grew by 29.3% QoQ (-24.4% YoY) to Rs 882, primarily led by -2.3% QoQ (-3.3% YoY) in opex/tn coupled with +1.8% QoQ (-7.6% YoY) in blended realization/tonne. Accordingly, adjusted profit after tax decreased by 59.7% YoY to Rs 17.5 billion (+19.1% QoQ)..Top Picks UltraTech CementUltraTech Cement’s capacity is expected to increase from 171.71 mtpa currently, to 188 mtpa/200 mtpa/215 mtpa by FY25E/FY26E/FY27E (incl. 10.75 mtpa Kesoram) which will support future growth. It will continue to witness healthy operating cash flow (average Rs 148.7 billion/year over FY24-FY27E) and free cash flow (average Rs 27.0 bn/year over FY24-FY27E) thereby leading to deleveraging (Net D:E of 0.19x/0.12x/0.01x in FY25E/FY26E/FY27E). We expect improvement in Ebitda/tn from Rs 1,089/Rs 881 in FY24/9MFY25 to Rs996/Rs1,204/Rs1,288 in FY25E/ FY26E/FY27E. We expect a revenue/Ebitda/adjusted profit after tax CAGR of 12.1%/19.6%/22.4% over FY24-27E led by 9.9%/20.5%/9.3% volume growth and -4.7%/ 1.5%/0.7% realization growth in FY25E/FY26E/FY27E. UltraTech, being the largest player in the Indian cement industry, is its biggest advantage. Accordingly, we recommend ‘Accumulate’ rating with target price of 11,947 on 15.5x consolidated FY27E EV/Ebitda + 50% of FY27E CWIP + Star Cement stake at 1x P/BV..Birla Corporation We believe Birla Corp is well placed in the industry given-focus on the trade segment (68%),increasing share of premium products (59% in trade),higher share (79%) of high-margin blended cement and sizable presence in relatively better regions of Central, North and West. Improvement in profitability to continue (lower versus earlier estimates), as Mukutban utilization improves (>60% in Q3 FY25). To support growth, Birla Corp is advancing its expansion plans of 1.4 mtpa cement capacity at Kundanganj, UP by Q1 FY26E. Additionally, the company has plans to increase its capacity from 20 mtpa to 25 mtpa (details of 3.6 mtpa awaited) by FY27E. We expect Revenue/ Ebitda/APAT CAGR of 2.3%/3.7%/10.5% over FY24-27E led by 1.6%/5.8%/6.0% volume growth and -7.7%/ 2.5%/0.0% cement realization growth in FY25E/FY26E/ FY27E. Accordingly, we recommend ‘Accumulate’ rating with target price of Rs 1,347 based on 8x consolidated FY27E EV/Ebitda and 50% Capital WIP of FY27E (Our target price factors EV of $61/tonne)..Click on the attachment to read the full report:.Ajax Engineering IPO — Should You Subscribe? Read Anand Rathi's Analysis.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Birla Corp, UltraTech Among Dolat Capital's Top Stock Picks In Cement Pack After Q3 Results — Here's Why

Cement Q3 Results Review: On QoQ basis, all companies reported realization/tonne growth with ACC being highest and Nuvoco lowest, adds Dolat Capital.

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Birla Corp, UltraTech Among Dolat Capital's Top Stock Picks In Cement Pack After Q3 Results — Here's Why

Cement Q3 Results Review: On QoQ basis, all companies reported realization/tonne growth with ACC being highest and Nuvoco lowest, adds Dolat Capital.

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