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Morningstar Equity
UltraTech Cement (Overvalued)
CMP: ₹2,718
Target: ₹2,319
Recently, UltraTech Cement has experienced a cyclical downturn in construction activity, driven by an economic slowdown and deferral of infrastructure projects and high interest rates. This has led to soft demand for cement, ready-mix concrete, and aggregates in some regional Indian markets. Our fair value estimate is predicated on the assumption of an eventual return to more normal business circumstances as the business cycle improves, and as the Government steps up infrastructure spending. We forecast compound annual revenue growth of 14 per cent during 2015-24. This will be driven by an average volume growth of 9 per cent and price growth of 4 per cent. We expect average annual GDP growth over our forecast period to be about 6 per cent.
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