UltraTech Cement Q3 Results Review - Upside Capped; Valuation Includes Everything: Yes Securities

Yes Securities Report

UltraTech Cement Ltd. reported inline revenue growth of + 8% YoY supported by + 6% YoY volume and + 2% YoY net sales realisation growth in Q3 FY24. Surprisingly, the total cost/tonne came lower than expectation, which declined 3% YoY resulted in Ebitda/tonne of Rs 1192, up by + 32 YoY in Q3 FY24.

Ebitda / adjusted profit after tax grew by + 39/68% YoY to Rs 33/18 billion on account of eased cost and healthy profitability.

As of Q3 FY24, UltraTech total grey cement capacity in India reached 133  million tonnes per annum with Burnpur Cement Ltd. asset acquisition (0.54 mtpa) and reach 77% utilisation level in Q3 FY24.

The phase-II expansion of 24.4 mtpa (including 1.8 mtpa slag mill) will enhance the cement capacity to 157.4 mtpa by FY25E and the pending debottlenecking of 2.65 mtpa got deferred.

However, the stock trades at 20/17 times enterprise value/Ebitda on FY25/26 which limits the upside for the stock in near-term.

We valued UltraTech Cement on 17 times EV/Ebitda on FY26E and arrived at target price of Rs 10,164 with a 'Neutral' rating.

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