Motilal Oswal has given Buy recommendation for UltraTech Cement recommended buy rating on the stock with a target price of Rs 9080 in its research re with a target price of Rs. 9080 in its research report issued on Jan 17, 2022

Motilal Oswal’s research report on UltraTech Cement

UTCEM’s 3QFY22 performance was impacted by cost inflation, primarily energy and other costs, leading to a 6.7pp YoY fall in EBITDA margin and 19% YoY fall in EBITDA/t. EBITDA fell 22% YoY, despite higher other operating income (up 2.3x YoY). Adjusted for tax write-backs, profit fell 26% YoY. The industry has seen peak of the fuel cost inflation and imported/domestic petcoke prices have declined 38%/33% from its peak in Nov-21. This should help cost moderate from 1QFY23. UTCEM is expected to benefit from capacity expansions (19.6mtpa over FY21-23E) and cost saving initiatives (increase in WHRS/solar power capacities). We expect 9% sales volume CAGR over FY21-24E. We raise our FY22-24E EPS estimate by 3-4% on higher other operating income and lower energy costs. We factor in 21% EPS CAGR over FY22-24E after a lower growth in FY22 (growth of 5% YoY).


The stock trades at 16.3x/13.9x FY23E/FY24E EV/EBITDA (v/s its 10-year average one-year forward EV/EBITDA of 15.1x). We value UTCEM at 16x FY24E EV/EBITDA to arrive at our TP of INR9,080. We reiterate our Buy rating.

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