Emkay Global Financial has given Buy recommendation for Ultratech Cement with a target price of Rs. 8500 in its research report issued on Oct 19, 2021

Emkay Global Financial’s report on Ultratech Cement

Consolidated EBITDA was flat YoY at Rs27bn (down 18% QoQ) in Q2FY22, in line with our estimate, as higher-than-expected cost/ton was offset by better blended realization (led by white cement and RMC business) and higher other operating income. Accordingly, blended EBITDA/ton declined 7% YoY/18% QoQ to Rs1,254. We expect UTCEM’s RoIC to increase to a sustainable level of 20%+ within 4-5 years (vs. 12% in the past decade), driven by rising utilization levels and improving margins. Factoring in higher opex/ton due to input cost inflation, we cut our FY22-24 EBITDA estimates by 3-4%.


We roll over to Dec’22 from Sep’22 and maintain our TP at Rs8,500. Our DCF-based TP (11.25% WACC, 8% FCFF growth post FY26) implies a 1-year forward EV/EBITDA of 15x (vs. 15.6x earlier). Maintain Buy.

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