The shares of the leading grey cement manufacturer gained up to 0.7 percent after Sharekhan, a well-known brokerage recommended a ‘Buy’ rating.
With a market capitalization of Rs 2.84 lakh crore, the shares of UltraTech Cement Ltd closed at Rs 9,860.00 per share, increasing around 0.37 percent as compared to the previous closing price of Rs 9,824.05 apiece.
Looking into UltraTech Cement Ltd’s performance, revenue increased by 8 percent from Rs 15,521crore in Q3 FY23 to Rs 16,740 crore in Q3 FY24. During the same period, net profit increased by 67 percent, from Rs 1,063 crore to Rs 1,775 crore.
Sharekhan, one of the well-known brokerages in India, gave a ‘Buy’ call on the cement stock with a target price of Rs 11,900 apiece, indicating a potential upside of 21 percent from Monday’s price of Rs 9,860 per share.
Here’s the reason for the bullish potential upside target:
● Ultratech has significantly increased its grey cement capacity by commissioning 13.2 mtpa capacities across various regions post Q3FY2024, reaching a total capacity of 151.7 mtpa, including overseas capacity. This expansion enhances its market presence and strengthens its position in the cement industry.
● With region-wise capacity additions, Ultratech achieves a balanced regional mix, except in the South. It remains on track to achieve its domestic and overall capacity targets for FY2025 and FY2027, indicating a strategic growth trajectory. Additionally, substantial investments of Rs. 32,400 crores are planned for ongoing capital expenditure over the next three years to support this expansion.
● As per the brokerage, the significant increase in cement transported through Indian railways during Q4FY2024, both on a quarterly and yearly basis, indicates a revival in cement demand. This recovery follows a weak Q3FY2024, suggesting improving market conditions and demand for cement products.
● Ultratech, with its widespread presence across India and recent capacity expansions, is well-positioned to capitalize on the revived cement demand. The company’s pan-India presence allows it to cater to increased demand across regions, potentially leading to improved sales volumes and performance.
● Further brokerage said, cement companies have initiated price hikes ranging from Rs. 20-80 per bag in April, following a significant decline in Q4FY2024. The Southern region is experiencing a sharper rebound in prices due to a notable fall in the previous quarter.
This pricing discipline initiative is expected to benefit the industry and Ultratech in the future.
UltraTech Cement Limited is an India-based firm that manufactures and sells cement and associated goods. It supplies Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC), Composite Cement (CC), and Ready-Mix Concrete (RMC).
Written by:- Abhishek Singh
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