Global Financial Emkay
In its research report dated August 06, 2021, Emkay Global Financial suggested a buy note on Ultratech Cement with a target price of Rs 8,500.
“We have a buy rating on the stock with a DCF based TP of Rs 8,500 (Sep’22E), implying a forward EV / EBITDA of 15x (from the current multiple of 16x).
According to the brokerage, Ultratech has identified the following important pillars of its growth strategy:
1) increase balance sheet strength and performance ratios
2) focus on cost optimization and efficiency gains
3) low cost expansion, mainly through brownfield expansion.
“We predict that increasing the share of green electricity, improving the blended ratio, reducing lead distance and increasing operating leverage will lead to sustainable cost reductions of Rs 90-100 / ton by fiscal year 24E, ”the brokerage added.
In its research report dated July 23, 2021, ICICI Direct suggested a buy note on UltraTech Cement with a target price of Rs 8,700.
“With a target of becoming net debt free by FY23E and an expected RoCE of 17% +, we remain positive on the business. Therefore, we maintain the BUY rating We value UltraTech at Rs 8,700, or 17x FY23E EV / EBITDA, ”the brokerage said.
UltraTech is India’s largest cement manufacturer, with a domestic capacity of 111.4 MT and market supremacy in most regions. During the previous three years, its capacity has increased by approximately 30 MT by organic and inorganic routes. It has demonstrated its ability to successfully integrate acquired assets and increase their use in a cost effective manner. The company is now focused on the fast growing East Indian market, which accounts for 10.2 million tonnes of the 19.6 million tonnes of total expansion planned for FY21-23E.
Sharekhan advised a buy note for UltraTech Cement, with a target price of Rs 8,800.
“We maintain a buy rating on UltraTech Cement (UltraTech) with a revised PT of Rs 8,800, taking into account revised upward estimates due to a healthy and sustained demand environment in FY2022. -fiscal year 2024. ” the brokerage said.
UltraTech continued to provide a pleasant operational surprise in Q1FY2022, boosted by solid volume growth, visible despite the impact of COVID-19 in Q1FY2022, higher cement prices and lower operating expenses. In the first quarter, net debt continued to decline. In addition, significant debt was repaid in July 2021. Plans to transform net cash in FY2024 and add 19.5 MTPA by FY2023 are still on track. Demand for rural and urban real estate, as well as major infrastructure projects, is expected to remain strong.
Motilal Oswal suggested a buy note on UltraTech Cement with a target price of Rs 8,770.
“The valuation is reasonable at 13.7x FY23E EV / EBITDA – a 10% discount from its past five year average. We estimate UTCEM at 16x FY23E EV / EBITDA to arrive at a TP of INR 8,770. the purchase, ”said the brikerage mentioned.
As of 1QFY22, UltraTech Cement (UTCEM) continues to increase costs and margins, posting the highest EBITDA / unit of INR 1,536 / t (+ 8% year-on-year) in company history. This, combined with a 47% year-over-year increase in volume, resulted in a 59% year-on-year increase in EBITDA. QoQ, net debt fell from INR 7 billion to INR 59.8 billion (0.44x EBITDA TTM). The continued growth program of 20 million tonnes per year, which is expected to generate a 13% CAGR in volume in fiscal years 21-24E, should help maintain the market share gains. We are improving our EPS forecast for FY22E / FY23E by 6% / 6%, based on a higher expectation of completion. In fiscal year 21-23E, we expect a CAGR of 26% of EPS.
This cement stock is the most recommended by brokerage houses
|Brokerage||Evaluation||Current market price||Target price|
|Global Financial Emkay||TO BUY||7,480 rupees||8,500 rupees|
|ICICI Direct||TO BUY||7,480 rupees||8 700 rupees|
|Sharekhan||TO BUY||7,480 rupees||8,800 rupees|
|Motilal Oswal||TO BUY||7,480 rupees||8 870 rupees|
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