UltraTech Cement Q4 Results Review - Resilient Performance Amid Pricing Pressure: Motilal Oswal

Motilal Oswal Report

UltraTech Cement Ltd.’s Q4 FY24 operating performance was above our estimates (9% beat on Ebitda), primarily fueled by lower-than-estimated opex/tonne. Ebitda stood at Rs 41.1 billion (estimate: Rs 37.6 billion), and Ebitda/tonne came in at Rs 1,173 (estimate: Rs 1,069). Adjusted profit after tax stood at Rs 23.1 billion (estimate: Rs 20.6 billion).

Management expects cement demand to grow ~7-9% YoY in FY25 after a 9.5% growth in FY24. It expects fuel consumption costs to drop to $130/tonne over the next three quarters from $150/tonne currently. It anticipates opex to continue declining, and savings should be around Rs 200-300/tonne over the next three years driven by higher blending ratio, higher usage of waste heat recovery system and renewable energy, alternate fuel, and a reduction in lead distance.

We largely maintain our estimates and reiterate our Buy rating on the stock, given its:

1. leadership position in the industry,

2. robust expansion plans without leveraging the balance sheet, and

3. structural cost improvement measures.

We value UltraTech Cement at 18 times FY26E enterprise value/Ebitda to arrive at our target price of Rs 11,500.

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