Most brokerages raised their price targets for UltraTech Cement Ltd. after the first quarter, on account of a recovery in demand, stable pricing and lower-than-expected costs, among others.
That’s despite a sequential drop in net profit and revenue of the cement maker in the three months ended June.
Ebitda per tonne rose 19% quarter-on-quarter to Rs 1,420.
Net realisations declined 23% sequentially to Rs 4,992 a tonne.
Volumes were down 23% over the preceding three months to Rs 13.8 million tonnes; but were up 46% year-on-year.
Shares of UltraTech Cement rose as much as 2.4% before paring gains, compared with a 0.18% gain in the benchmark Nifty 50. The stock has now gained for three days on the trot.
Here are the key takeaways from the brokerage reports:
Jefferies
Retains ‘hold’; raises target price to Rs 7,200 from Rs 6,500 apiece.
UltraTech reported a record high unit Ebitda at Rs 1,550 a tonne, a key positive in Q1 FY22.
Earnings surprise was due to higher unit realisation as well as lower costs.
Management commentary has also been positive on demand recovery, stable pricing.
Management focus remains on growth with 19.5-million-tonnes projects underway.
Balance sheet is set to turn net cash in less than two years.
Upgrades EPS forecast by 13-15%.
CLSA
Maintains ‘outperform’ rating, with a target price of Rs 7,459 apiece.
Q1 Ebitda was 15% above estimates, but cost inflation to impact earnings.
Cost pressure likely to weigh on profitability.
Capacity additions on track and deleveraging progressing as well.
Well placed for the demand upcycle but risk-reward fair.
Goldman Sachs
Maintains ‘buy’ (conviction list), hikes target price to Rs 8,550 from Rs 7,700 apiece.
Strong demand recovery in June across end-markets drove realisation higher.
Continues to execute on costs, and absorb commodity inflation through price increases.
UltraTech’s volume outperformance is likely to continue.
HSBC Global Research
Maintain ‘buy’; hikes target price to Rs 8,200 from Rs 8,000 apiece.
Highest ever Ebitda/tonne; strong read through for the industry.
Both demand and pricing remain stronger than expected.
Capacity expansion, product mix improvement and debt reduction to strengthen positioning.
Investec Securities
UltraTech’s Q1 recorded an operational beat aided by price growth and cost gains.
Execution is in line with indicated focus areas — growth, deleveraging, improving return ratios and ESG.
Management is committed to construction chemicals/waterproofing and white cement/putty operations.
Incremental disclosures in allied forays, incentives on expansion key surprise variables.
Other Brokerage Reports On UltraTech Cement
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