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HDFC Securities Institutional Equities
We maintain an Add rating on UltraTech Cement Ltd. with an unchanged target price of Rs 11,260/share (16.5 times Sep-26E consolidated Ebitda). We interacted with the management recently on business and industry outlook.
Overall demand remains sluggish in Q2 FY25 and pricing is weak. However, there is hope for demand to recover from H2 FY25 onwards and this should also support cement pricing.
UltraTech Cement remains focused on reducing its unit opex (by Rs 300/million tonne) through increased blending, rising share of lowcost green energy, lead distance reduction and other efficiencies.
Even its fuel cost curve should continue to trend down in FY26E. These along with expected gains from ongoing industry consolidation should support a margin uptick from FY26E onwards.
Its ongoing organic expansions along with acquisitions of Kesoram Industries and India Cements should increase consolidated capacity by 46% during FY25-27E to 216 million metric tonne.
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