Buy UltraTech Cement; target of Rs 13,200: Emkay Global Financial

Moneycontrol • 11 days ago

Original source

Key Investment Pillars

  • Volume growth: UltraTech Cement's domestic grey cement volumes grew ~14% yoy, outperforming the industry growth of ~9%.
  • Margin profile: The company's EBITDA/t stood at Rs974, with a healthy margin profile expected to improve due to operating leverage benefits and cement price hikes.
  • Market share: UltraTech Cement remains the top pick due to its purchasing power and strengthening market-share position amid a volatile environment.
  • Expansion plans: The company is on track to reach >240mtpa by FY28-end and will announce its next phase of organic expansion by FY27-end.

Thesis Validation Checklist

  • Industry demand growth: Watch for 7-8% industry demand growth and double-digit volume growth for UltraTech Cement.
  • Cement price hikes: Monitor further hikes over the next couple of months, with the full benefit likely to reflect in 3QFY27.
  • Operating leverage: Track the improvement in operating leverage due to higher capacity utilization and cost discipline.
  • Market share: Observe UltraTech Cement's market share position and its ability to maintain or increase its share in a competitive market.