BQ Prime'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 BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Axis Securities Report
We initiate coverage on UltraTech Ltd. with a 'Buy' recommendation and a target price of Rs 9,350/share, which implies an upside of 13% from the current levels.
Key Investment Thesis
Capacity expansion and positive demand environment to drive growth
UltraTech Cement is in the process of expanding its consolidated capacity by 19% from the current135 million tonnes per annum to 160 mtpa, which will get operational in phases over FY24E-FY26E. With the completion of the existing expansion, the company plans to further consolidate its market position, increase market share, and maintain its leadership position in the cement industry.
Easing input costs along with cost optimisation measures to improve margins
The recent correction in fuel prices(pet coke and coal) bodes well for the company as it will aid in improving its margin, which will start flowing in from Q1 FY24 and onwards. UltraTech Cement's integrated operations, improving cement-to-clinker ratio, digitisation of sales channel, production and sale of more blended cement and effective utilisation of resources make it one of the most efficient cost producers of cement in India. Moreover, it has initiated various cost optimisation exercises at its operating facilities which will aid in its margin improvement going forward.
Diversified and strong market presence
The company commands a healthy 22% market share of the industry in terms of capacity. Moreover, its capacities are geographically diversified (20% in the North,23% in the Central,18% in the East, 23% in the West, and the balance 16% in the South region) which keeps the company relatively insulated from the fluctuations in regional demand-supply dynamics. In the second phase of expansion, UltraTech Cement is more concentrating on increasing its presence in demand-accretive Central and East regions, which have promising growth opportunities. With the commissioning of extended capacity, the company will further consolidate its position in its key markets.
Strong brand image supported by a healthy financial position
UltraTech Cement promoters have extensive experience in the cement industry that spans several decades. With concentrated efforts over the period of time, the company has built strong capacity through organic as well as inorganic routesand has thereby catapulted itself as the top cement producer in India.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime 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 BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
