UltraTech Cement Q2 Results Review - Weak Demand, Pricing Hurt Margin: Motilal Oswal

Motilal Oswal Report

UltraTech Cement Ltd. witnessed margin pressure in H1 FY25 due to a slowdown in demand and pricing pressure. However, the company is actively working on a cost-efficiency program for sustainable cost reduction, and targeting a cost saving of Rs 300/tonne over the next three years.

Its cost-saving initiatives include an increase in C:C ratio, green power, and AFR share; logistics cost optimisation; and improvement in the overall plant efficiency.

We estimate a compound annual growth rate of 16%/18% in consolidated Ebitda/adjusted profit after tax over FY24-FY27. UltraTech Cement is estimated to continue to gain market share with its robust capacity expansion (including inorganic growth).

We value the stock at 20 times Sep’26E EV/Ebitda to arrive at our target price of Rs 13,000 (earlier Rs 13,600). We reiterate our Buy rating.

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