Sharekhan has given Buy recommendation for UltraTech Cement with a target price of Rs. 7100 in its research report issued on Jun 03, 2022
Sharekhan’s research report on UltraTech Cement
Ultratech announced a capex of Rs. 12,886 crore to add 22.6 mtpa by FY2025 in addition to its ongoing expansion of 16.3 mtpa additions by FY2023. It is likely to increase its capacity share led by expedited capacity additions. Similar aggression seen in terms of capacity additions by other three large players may lead to lower operational profitability for industry if demand is unable to keep pace with supply and energy costs do not normalize materially. UltraTech’s strengthened balance sheet is unlikely to get stretched although its target of achieving net surplus position would get delayed to post FY2025.
We maintain a Buy on UltraTech with a revised PT of Rs. 7,100, given a downward revision in valuation multiples to factor in the risk on operational profitability led by aggressive expansions by large players including UltraTech.