Emkay Global Financial has given Buy recommendation for Ultratech Cement with a target price of Rs. 8750 in its research report issued on Jan 18, 2022

Emkay Global Financial’s report on Ultratech Cement

Consolidated EBITDA declined 22% YoY/11% QoQ to Rs24bn in Q3FY22, broadly in line with our estimate, as marginally higher-than-expected cost/ton was offset by better other operating income. Blended EBITDA/ton fell 20% YoY/17% QoQ to Rs1,046. With its large pan-India diversified market presence, premium brand positioning and focus on cost efficiency, UTCEM is better placed to improve margins in the medium term. Besides, the company’s RoIC is expected to increase to a sustainable level of 20%+ within 4-5 years (vs. 12% in the past decade). Factoring in higher opex/ton due to input cost inflation and recent weakness in demand, we cut our FY22/FY23 EBITDA estimates by 8%/3%, while we broadly maintain FY24 estimates.


We roll over to Mar’23 from Dec’22 and increase our TP by 3% to Rs8,750. Our DCFbased TP (11.25% WACC, 8% FCFF growth post FY26) implies a 1-year forward EV/EBITDA of 15x (vs. current multiple of 16.5x). Maintain Buy.

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