Ultratech cement VS Shree cement: Cement is an essential component required for the construction of any infrastructure, be it buildings, roads, or dams.
To maintain an adequate supply, there are a lot of companies that are engaged in manufacturing cement. In this article, we will take a look at the analysis of two cement giants Ultratech cement and Shree cement.
Keep reading to find out!
The covid-19 pandemic halted all the construction activities throughout the world. This led to a de-growth of 10-12% in the cement industry.
To revive the sector, the government has exponentially increased its spending to boost the sector. Schemes like ‘Housing for All by 2022’ have led to enhanced budgetary allocations for the cement industry.
India is the world’s second-largest cement market, both in terms of production and consumption. It accounts for more than 7% of the global installed capacity.
The housing and real estate sectors account for nearly 65% of the total cement consumption in India. It is estimated that India’s cement production capacity is expected to reach 550 MT by 2025.
UltraTech Cement Limited, a part of Aditya Birla Group, is India’s largest cement selling brand. It ranks 1st in the white cement and cement-based Putty category based on its sales volume.
It has a 21% capacity share in India’s grey cement industry. Around 1.7 Billion bags of cement are produced every year.
The company has a global presence in countries like UAE, Sri Lanka, and Bahrain which contributed to around 4% of the total revenue.
The company’s shares are listed on the BSE and NSE. Its Global Depository Receipts are listed on the Luxembourg Stock Exchange and Bonds are listed on the Singapore Exchange Securities Trading Limited.
It is the only company in the world to have a capacity of over 100 million tonnes in a single country, outside of China. The company has a market capitalization of Rs 199,629 Crore which is the highest among its peers.
India’s third-largest cement group today with operations spread across the country. It is engaged in producing and selling power under the name Shree Power (Captive Power Plant) and Shree Mega Power (Independent Power Plant).
Shree cements is one of the biggest cement makers in Northern India. The company has a subsidiary in the UAE through which it sells its products in the international market.
It has a production capacity of 43.4 million tonnes per annum. The shares of Shree cement are listed on NSE and BSE in India. The market capitalization of Shree cement is Rs 88,232 Crore.
Now let us have a look at the various financial metrics of the companies.
Ultratech Cement VS Shree Cements: Revenue
Ultratech Cement: The company’s revenue grew at a 5-year CAGR of 12.2%. It can be seen in the table below that over the years the revenue of the company has increased.
The rising trend can be attributed to the increased production and sales volume of the company. Along with that, the company’s integrated presence and strong logistics channels have helped it achieve this.
Shree Cement: The company’s revenue grew at a 5-year CAGR of 18.82 %. Focus on continued optimization in mining operations and higher in-house production of gypsum coupled with digital transformation and innovation has led to this upsurge.
Company’s continued focus on raising the share of its premium products along with continuous efforts to position its brands led to maintaining price realization.
|Revenue (Rs in Cr)|
|Ultratech Cement Ltd.||25,374.94||30,978.62||41,608.81||42,429.89||44,725.80|
|(Revenue growth in %)||-||22.08%||33.84%||2.33%||5.41%|
|(Revenue growth in %)||-||14.34%||19.29%||1.55%||5.75%|
Ultratech Cement VS Shree Cements: Profitability
Coming to profitability, both the companies have maintained ratios at par with each other. The gross profit margin of Shree Cement has been higher and more consistent than Ultratech in the last 5 years.
This shows that the management is more efficient in managing its expenses. The net profit margin of Shree cement grew at a 5-year CAGR of 14.87% whereas that of Ultratech cement saw a 5-year CAGR of 17.13%.
|Profit Margin ratios (Rs in Cr)|
|Gross Profit Margin (%)|
|Operating Margin (%)|
|Net Profit Margin (%)|
Ultratech Cement VS Shree Cements: How Much Are Investors Earning?
The ROE metric shows how efficiently the company is able to utilize the shareholder’s equity to generate returns. The 3-year average ROE of Shree cement is 13.49% which is higher than Ultratech cement which has a ratio of 12.99%.
The ROCE measures how well the company is utilizing the available capital. Shree cement has a 3 years average ROCE of 15.32% which is above the ideal ratio of 15%. Ultratech cement has a 3 years average ratio of 12.31%.
The Earnings per share show how much profit the company is able to make for each share of its stock. The higher the EPS the better it is considered. Shree cement has the highest TTM EPS of 685 in the industry. Ultratech cement has 225.
|Return ratios (Rs in Cr)|
|Return On Equity (ROE)|
|Return On Capital Employed (ROCE)|
|Earnings Per Share (EPS)|
|Dividend Payout Ratio (DPR)|
Ultratech Cement VS Shree Cements: How Does The Valuation Of The Company Look?
EV/EBITDA ratio measures Enterprise Value (EV) to the Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA).
This ratio assesses the overall financial performance of the firm and a ratio below 10 is considered healthy. Ultratech Cement has a ratio of 17.3 and Shree Cements has a value of 23.86.
The sectoral PE is 34.13. The TTM PE ratio of Ultratech cement is 30.72 which is below the sectoral ratio and shows the company has the potential to grow. On the other hand, Shree cement has a ratio of 35.58 slightly above the industry average.
The P/B ratio is a comparison of a firm’s market capitalization to its book value. The ideal P/B ratio is 1 and acceptable till 3. Shree segments have a higher P/B ratio of 6.91 as compared to Ultratech with 4.41.
|Valuation Parameter (Rs in Cr)|
|Price to Earnings Ratio (PE)|
|Price to Book Value (P/B)|
Ultratech Cement VS Shree Cement: Future Prospects Of The Company
Ultratech Cement: The company is not far behind in its sustainability measure. In fact, it became the first company in India and the second in Asia to issue sustainability-linked bonds in 2021.
Further, the company is focused on increasing its manufacturing capacity through brownfield and greenfield expansions for which it has allocated Rs 5,477 crores.
Shree Cements: The company has been able to create a strong brand name in the minds of its customers through quality products. It further focuses on improving its operational practices by optimizing cost.
The company is also working towards sustainability with more than 48% of its power consumption being from renewable sources.
In this article, we looked at the analysis of Ultratech Cement Vs Shree Cement. The cement industry is dependent on other raw materials as well. Therefore, it is imperative to look at other prices as well.
The cement industry in India is still untapped in many regions. This opens up huge opportunities for both companies and investors. Happy Investing!
Have you invested in these companies? Let us know in the comments below.
Start Your Financial Learning Journey
Want to learn Stock Market and other Financial Products? Make sure to check out, FinGrad, the learning initiative by Trade Brains. Click here to start your financial learning journey with us. And do not miss out on the Introductory Offer!!