Brokerages Up Targets On UltraTech Cement After Q3 Results
A woman worker carries a plate full of cement-concrete mix on her head at a construction site in New Delhi, India. (Photographer: Amit Bhargava/Bloomberg News)

Brokerages Up Targets On UltraTech Cement After Q3 Results

Analysts remained bullish on UltraTech Cement Ltd. after the third quarter as demand improved, costs reduced, and volumes rose aided by deleveraging.

Net profit of the Aditya Birla Group flagship cement maker jumped more than twofold over the year earlier to Rs 1,584.3 crore in the three months ended December. Its operating income, too, rose to the highest since the first quarter of 2014-15.

The company’s net debt reduction during the third quarter stood at Rs 2,696 crore. Net debt reduction for the nine months ended December was at Rs 7,424 crore.

Grasim Industries Ltd., another Aditya Birla Group company that holds a 58.9% stake in UltraTech Cement, announced its foray into the paints business, currently dominated by Asian Paints Ltd., Berger Paints Ltd. and Kansai Nerolac Paints Ltd. Grasim will make an initial investment of Rs 5,000 crore over the next three years, primarily towards capital expenditure.

While JPMorgan appreciated UltraTech’s move not to enter into the paints business, Investec Securities doesn’t see any drag on its cash flow as Grasim would chase the paints ambition.

Of the 46 analysts tracking UltraTech Cement, 42 recommend a ‘buy’, three suggest a ‘hold’ and one has a ‘sell’ rating. The average of Bloomberg consensus 12-month return potential implies an upside of 21.4%. The stock gained as much as 5.7% on Monday but pared some of the gains to trade 2.3% higher. That compares with a 0.42% gain in the Nifty 50.

Also read: Ultratech Cement Q3 Results: Profit More Than Doubles As Demand Recovers

Here’s what brokerages have to say about UltraTech Cement’s third-quarter results…

Goldman Sachs

  • Reiterates ‘buy’, raises target price to Rs 6,750 from Rs 5,900 apiece
  • All-round beat; demand revival sustaining
  • Volume growth of 11% year-on-year and lower cash costs drove the beat
  • Higher freight, coal costs likely a drag on industry profitability for the next two-three quarters
  • Volume growth leaders are likely to outperform; UltraTech a biggest beneficiary
  • Key risks: lower-than-expected volume, pricing growth, higher costs, delay in capacity ramp-ups


  • Maintains ‘hold’, hikes target price to Rs 6,200 from Rs 6,000 apiece
  • Operating unit Ebitda at near Rs 1,300 per tonne remained strong despite cost inflation
  • Net gearing continues to slide and commentary on demand is fairly positive
  • Focus on ESG is also evident and there is serious work underway
  • Upgrades EPS estimate by 5-15%


  • Maintains ‘overweight’ with a target price at Rs 6,700 apiece
  • A solid volume growth performance supported by share gains
  • Capacity expansion need of the hour
  • Steep cost inflation to manifest in Q1 F22
  • Operating leverage and efficiency initiatives to mitigate the hit
  • Appreciates UltraTech for not pursuing paint business foray, given limited synergies with core grey cement business

Investec Securities

  • Maintains ‘buy’; raises price target to Rs 6,168 from Rs 5,887 apiece
  • Operational beat, deleveraging continues
  • UltraTech’s cash flow won’t see any drag as Grasim chases its Paints ambitions
  • The company’s market leading position on grey cement/ready mix concrete/bulk terminals
  • UltraTech better off to focus on other segments—construction chemicals, water proofing—where it has a right to win
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