Accumulate Ultratech Cement; target of Rs 13,634: Prabhudas Lilladher

Prabhudas Lilladher's research report on Ultratech Cement

UltraTech Cement (UTCEM) reported tad weaker Q1FY26 operating performance, due to weak like to like volume growth, which was negated by higher pricing. Average grey cement realization improved 2.1% QoQ, led by price hikes mainly in the Southern and Eastern regions. Cons volumes grew 9.7% YoY to 36.8mt (Kesoram volumes included in the base) aided by 2.18mt India Cements (ICEM) volumes. Lower P&F along with higher operating leverage enabled UTCEM to deliver std and cons EBITDA/t of Rs1,271 and Rs1,197 respectively. Management’s target of achieving ICEM' EBITDA/t of Rs500/1,000 by FY26/27E appears to be on track, with ICEM reporting Rs424/t in Q1. UTCEM expects to significantly reduce ICEMs operating costs by FY28E, supported by capex towards increasing green power mix, higher AFR, and possible capacity addition at existing locations. Transition of both Kesoram and ICEM brands towards UTCEM is on track and mgmt. would take ICEM merger decision post successful transition by end FY27E.

Outlook

We continue to remain positive on UTCEM for its superior execution capabilities and presence across regions to cater to strong domestic growth. We cut our FY26E EBITDA estimate by ~3% to factor in weak H1. We expect UTCEM’s Revenue/EBITDA/PAT to deliver a CAGR of 17%/34%/47% over FY25– 27E on weak FY25 base. The stock is trading at EV of 20.8x/16.6x FY26E/FY27E EBITDA. Maintain ‘Accumulate’ with revised TP of Rs13,634 (earlier Rs13,668) valuing at 18x EV of Mar’27E EBITDA.

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Ultratech Cement - 22072025 - prabhu