UltraTech Cement Q2 Results Review - In The Proving Ground; ICICI Securities Maintains 'Hold' Rating

ICICI Securities Report

UltraTech Cement Ltd.’s focus on increasing its capacity/market share and enhancing efficiency remains heartening. However, in Q2 FY25, the sectoral pangs of subdued demand and weak prices got the better of the industry leader. Ebitda at Rs 20.2 billion slipped 21% YoY/34% QoQ tracking-

1. meek ~3% YoY domestic volume growth (though superior to our industry forecast of it being flat); and

2. weak realisations, down ~3% QoQ.

Blended Ebitda/tonne stood at a multi-quarter low of Rs 725, down 24%, both on a YoY and QoQ basis. Despite assuming recovery (we pencil-in an Ebitda/tonne of Rs 1,051 in H2 FY25), the odds of elevated competitive intensity are forcing our hand to chop FY25E/FY26E Ebitda forecast by ~8%/4%.

We continue to value the industry leader at 16 times FY26E EV/Ebitda and maintain Hold with a revised target price of Rs 10,555 (Rs 11,046 earlier).

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