UltraTech Cement’s (UTCEM) operating performance was in line with expectations, with consolidated Ebitda at Rs 33.2 bn compared to the estimated Rs 33 bn and Ebiitda per tonne at Rs 1,049 compared to the estimated Rs 1,043. The adjusted profit was Rs 16.7 bn compared to the estimated Rs 17.5 bn. The company was able to offset lower realisation by keeping opex per tonne lower than expected. The demand for cement has sustained in April 2023 after a strong Q4, and UTCEM aims to grow 4-5 percentage points above the industry in the fiscal year 2023-24. Cement prices have remained stable in April 2023. The expansion plans of UTCEM are on track, and the phase-2 expansion of 22.6 million tonnes per annum will be commissioned by the first half of FY2025-26. We largely retain our FY24/ FY25 estimates and reiterate our BUY rating on the stock, given its: (i) leadership position in the industry, (ii) robust expansion plans without leveraging the balance sheet, and (iii) structural cost improvement. We value UTCEM at 15.5x FY25E EV/Ebitda to arrive at our revised TP of Rs 8,600.
Grey cement realization flat q-o-q; Ebitda/t came in at Rs 1,049
Best play in the sector: We estimate UTCEM’s consolidated volume to report 8% CAGR over FY23-25. It has been generating strong cash flows and we estimate cumulative OCF/FCF to be at `238 bn/`121 bn over FY24-25. We estimate the company to become net cash positive in FY24. The stock trades at 15.8x/13.6x FY24E/ FY25E EV/Ebitda (v/s its 10-year one-year average EV/Ebitda of 15.7x). We value UTCEM at 15.5x FY25E EV/Ebitda to arrive at our revised TP of `8,600.