Prabhudas Lilladher has given Buy recommendation for Ultratech Cement with a target price of Rs. 8600 in its research report issued on Oct 19, 2021

Prabhudas Lilladher’s research report on Ultratech Cement

UTCEM reported Q2FY22 earnings in line with our estimates, largely due to one-time income in other operating income segment. While, costs came significantly above our estimates due to higher other expenses. EBITDA/t (Incl other operating income) fell 4.5% YoY (↓17% QoQ) to Rs1,320 (PLe: Rs1,355). Ex of other operating income, EBITDA/t fell 10% YoY/22% QoQ to Rs1,182 (PLe: Rs1,285) Backed by sound B/S (Net debt/EBITDA at 0.5x) and steady cash flows, UTCEM is expanding capacity by 17.5% or 19.5mnt over next couple of years along with sizeable investment in high payback and environment friendly renewable power (WHR + Solar) to increase its share to 34% by FY24 from current 14% of overall power requirement. Led by its dominant size (22% market share) and highly efficient operations, we believe that UTCEM stands out as the best candidate to play the sector.


However, we expect near term weakness in the sector due to headwinds on margins coupled with unabated increase in energy cost. Reiterate BUY with TP of Rs8,600, EV/EBITDA of 17.0x FY23e.

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