Workers unload sacks of cement. (Photographer: Kuni Takahashi/Bloomberg)

What Dalal Street Made Of UltraTech Cement’s March Quarter Earnings

Most brokerages maintained their bullish rating on UltraTech Cement Ltd., as the cement maker’s operational performance in the March quarter surpassed analyst estimates.

UltraTech reported a sales volume growth of 31 percent and realisation growth of 5 percent on a year-on-year basis for the quarter ended March. Both were above Bloomberg consensus estimates. Lower employee costs and stable freight expenses despite higher energy costs led to operational efficiency.

Here’s what brokerages made of UltraTech’s fourth quarter numbers:

Morgan Stanley

  • Maintains ‘Overweight’ rating with a price target of Rs 4,894 per share, implying an upside of 18 percent from current levels.
  • UltraTech will continue to lead the industry in volume growth.
  • Management believes industry margins bottomed out in the March quarter.
  • Management sees upside risk to costs from the rise in pet-coke and crude.
  • UltraTech expects utilisation for acquired capacities (from Jaiprakash Associates Ltd.) to be over 80 percent in the current financial year.
  • Capacity expansion remains on track.
  • Management expects to commission 2.2 million tonne clinker unit in September and a 4 mt grinding unit by March 2019 in central India.


  • Maintains ‘Buy’ rating with a price target of Rs 5,150. That implies a 25 percent upside.
  • Cement sector on the cusp of a cyclical upturn and UltraTech appears best geared for it.
  • Jaiprakash Associates’ capacity was fully integrated in just nine months.
  • Achieves cash break-even one quarter ahead of guidance.
  • Likely to break even on profit before tax by first quarter of 2019-20.


  • Good realisations led surprise in March quarter earnings.
  • Management has forecast FY19 industry demand growth at 8-10 percent.
  • Company bought 3.5 mt cement capacity on stream in less than 12 months at a capex of $90 per tonne.
  • Replication of this by competition may pose risk to current capacity addition forecasts.
  • News flow on Binani Cements is the key event to watch out for.

Kotak Securities

  • Maintains a ‘Sell’ rating with a revised target price of Rs 3,125 from Rs 3,050 earlier.
  • Company raised market share to 22 percent in the March quarter from 17 percent in the first quarter of the previous year.
  • Closed FY18 with earnings before interest, tax, depreciation and amortisation growth of 18 percent aided by contribution from acquired capacities.
  • A seasonally strong quarter saw modest price increases during the period.

Shares of the company were trading nearly 2 percent lower at Rs 4,050.60 at 3 p.m. on the NSE.