Buy UltraTech Cement, target price Rs 13,000: JM Financial

JM Financial has a buy call on UltraTech Cement with a target price of Rs 13,000. The current market price of UltraTech Cement is Rs 10,430.5 Time period given by analyst is year when UltraTech Cement price can reach the defined target.

UltraTech Cement, incorporated in 2000, is a Large Cap company with a market cap of Rs 299900.18 crore, operating in the Cement sector.

UltraTech Cement 's key products/revenue segments include Portland/Possolana Cement, Cement Grey, Other Operating Revenue, Scrap, Lease Rentals, Sale of services for the year ending 31-Mar-2024.


Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 17437.62 crore, up 9.98% from last quarter Total Income of Rs 15855.46 crore and up 3.30% from last year same quarter Total Income of Rs 16880.45 crore. The company has reported net profit after tax of Rs 1474.77 crore in the latest quarter.

The company's top management includes Mr.Kumar Mangalam Birla, Mrs.Sukanya Kripalu, Mr.Sunil Duggal, Mrs.Alka Bharucha, Mr.Arun Adhikari, Mrs.Rajashree Birla, Mr.Atul Daga, Mr.K C Jhanwar, Mr.K K Maheshwari, Mr.S B Mathur. Company has KKC & Associates LLP as its auditors. As on 31-12-2024, the company has a total of 29 crore shares outstanding.

Investment Rationale
The UltraTech Cement board has announced the company?s entry into the wires and cables segment with a planned capex outlay of Rs 18 billion over the next 2 years. The plant will be set up near Bharuch, Gujarat, and the company aims to commission it by Dec?26. On full ramp-up, JM Financial estimates potential EBITDA accretion of 4-5% on FY27E EBITDA base. Given the group?s growth ambitions and UltraTech?s robust cashflow generation (OCF of ~Rs 290 billion over FY26E-27E), they also don?t rule out the possibility of the group entering into other building solution segments in future. Though capex intensity is low and unlikely to stretch the balance sheet, the investment into a non-cement business is likely to raise concerns over capital allocation. The brokerage maintains a BUY with Mar?26E target price of Rs 13,000 based on 19x FY27E EV/E as UltraTech's return ratios are poised to improve structurally over the next 3-4 years owing to i) rising asset turnover; ii) low cost of expansions; and iii) rising profitability.