Broker's call: UltraTech Cement (Buy)

| Updated on June 21, 2019 Published on June 22, 2019

Indiabulls Ventures

UltraTech Cement (Buy)

CMP: ₹4,595.35

Target: ₹5,100

Investments rationale: 1. UltraTech Cement continuous to report stellar set of quarterly numbers whereby sales grew by 17 per cent y-o-y and 16 per cent q-o-q to ₹10,905 crore in 4QFY19 as against ₹9,290 crore in 4QFY18 on a bottom-line jump of whopping 127 per cent on a yearly basis to ₹ 1,014 crore in 4QFY19 as against ₹446 crore in 4QFY18.

2. Cement volume rose by 15 per cent on a yearly basis, driven chiefly by strong growth in the eastern and southern markets to 21.30 million tonnes in 4QFY19 as against 18.47 mt in 4QFY18. The core reason for volume growth to increase is due to increase in capacity utilisation rate to good 85 per cent in 4QFY19 as against 76 per cent in 3QFY19.

Outlook & valuations: UltraTech Cement has the highest capacity utilisation of 80 per cent within the industry as against industry’s average capacity utilization of 76 per cent.

We believe there is immense demand for cement in the country on account of the government’s focus on infrastructure development and government’s vision of ‘housing for all’ in FY2022.

Published on June 22, 2019
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