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Prabhudas Lilladher's research report on Ultratech Cement

UltraTech Cement (UTCEM) reported a strong Q4FY25 standalone operating performance driven by a 9.6% YoY volume growth supported by housing, rural and commercial segments. Average blended std realization declined 3% QoQ, impacted by the consolidation of Kesoram (KSI); however, the recent increase in cement prices in April is expected to benefit in Q1FY26. Higher volume growth resulted in strong operating leverage, enabling UTCEM to deliver EBITDA/t of Rs1,240 (PLe Rs1,197). UTCEM has already initiated rebranding exercises for acquired companies and expects transition to complete by FY27E. Mgmt. expects operating performance of ICEM/KSI to improve gradually and targets to achieve FY26E EBITDA/t of Rs500/800 from Rs40/399 in Q4FY25 respectively. Over the last two years, UTCEM has undertaken sustainable cost improvement initiatives such as an increase in green power mix, AFR %, blending ratio, and with higher volumes it has already achieved Rs86/t efficiency gains in FY25 out of earlier targeted gains of Rs300/t by FY27E. With ongoing organic expansion, UTCEM’s capacity would exceed ~212mtpa by FY27E. We expect cement demand to remain stable, being a domestic commodity, and expect UTCEM to continue gaining market share through aggressive capacity additions across regions.

Outlook

The stock is trading at EV of 19.5x/16x FY26E/FY27E EBITDA. Maintain ‘BUY’ with revised TP of Rs13,668 (earlier Rs12,868) valuing at 18x EV of Mar’27E EBITDA.

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Ultratech Cement - 29042025 - prabhu

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