UltraTech Cement - Better Placed Versus Peer: ICICI Securities
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ICICI Securities Report
We expect UltraTech Cement Ltd. to continue to post industry leading growth and profitability over FY21-24E backed by low-cost brownfield expansions and increased cost efficiencies.
Its diversified pan-India market mix, premium brand positioning, strong distribution network and large presence in non-trade segment allow it to wither current demand uncertainties much better than peers.
Cost saving initiatives may result in Rs 100/tonne benefits (our estimate) by FY24E, and return on capital employed (post-tax) may expand by more than 400 basis points over FY22-24E to ~17%.
Dividend payout ratio has increased from 10% in FY20 to 20% in FY21 which may rise further as UltraTech Cement is likely to generate Rs 200 billion free cash flow over FY21-24E.
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