Target: ₹7,825

CMP: ₹6,355.8

UltraTech Cement’s operating performance was marginally ahead of our estimates led by higher volumes/lower opex. EBITDA was at ₹3,070 crore v/s estimated ₹2,930 crore and OPM was at 19.5 per cent v/s estimated 18.8 per cent.

Adjusted PAT (adjusted for tax reversals) was at ₹1,480 crore v/s estimated ₹1,450 crore.

The management indicated that demand in Apr’22 is better than last year and current average price is up 9% v/s 4Q average. Average coal/petcoke price is likely to increase 10 per cent q-o-q in Q1-FY23 (lower than our estimates).

UltraTech Cement is expected to benefit from capacity expansions (19.5mtpa in FY22/23E) and cost saving initiatives (increase in WHRS/solar power capacities). Its capacity expansion plans and scope for improvement in utilisation of existing capacities offers strong growth visibility. Acquisition of 29.4 per cent stake in RAK Cement is expected to aid white cement growth. The management is hopeful of achieving higher growth in the Construction Chemical segment

We largely maintain FY23/24 estimates and expect energy cost to reduce in H2-FY23E. We maintain Buy rating on the stock.