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The shares of UltraTech Cement Ltd., the largest producer of grey cement, ready-mix concrete and white cement were trading near their 52-week low. As of 13:20 IST, the stock of the Aditya Birla Group was exchanging hands at ₹ 5,456 per share.

It has lost almost 30% of its value since the start of the year compared to an 11% decline in the benchmark NIFTY 50 index of which it is a constituent. 

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The consolidated net profits for the March quarter of 2022 increased by 48% to ₹ 2,620 crores against ₹ 1,775 crores in the same period last year. The operational revenue jumped 9.45% for the quarter and reached ₹ 15,767 crores. The board has recommended a dividend of ₹ 38 per share for the fiscal year which is subject to the approval of the shareholders.

The cement industry has been experiencing major headwinds on the account of increased energy costs with prices of pet coke and coal doubling during the period. The prices of fly ash, bauxite, gypsum and high-speed diesel which make up raw materials for the cement producers also climbed eating into their profits.

Further, a month ago, the Adani group agreed to buy the holdings of Swiss building materials manufacturer Holcim in ACC and Ambuja Cements. As the deal goes through, the cooking oil to energy conglomerate will hold 63.19% of Ambuja Cements and 54.53% of ACC having a combined value of ₹ 80,000 crores.

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But even if we combine the market capitalization of both the companies, UltraTech leads by a wide margin. Counting Ambuja Cements and ACC as one entity now, the market cap of the top 5 Indian cement companies stood at ₹ ₹369,491 crores. 

The following chart presents the market capitalization of the top cement producers.

Chart

Analysts at Morgan Stanley are overweight on the Ultratech Cement stock with a target price of ₹ 8,800, signalling an upside of 65% on the back of expansion plans for the upcoming demand cycle.

ICICI Securities sees a 60% upside and has given a target price of ₹ 8,500 per share with a time period of one year.

Written By – Vikalp Mishra

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