Outperform UltraTech Cement, target Rs 4950: Macquarie Capital Securities

Macquarie Capital Securities has outperform call on UltraTech Cement Ltd. with a target price of Rs 4950. The current market price of UltraTech Cement Ltd. is Rs 3815.0 Time period given by analyst is year when UltraTech Cement Ltd. price can reach defined target. .
UltraTech Cement Ltd., incorporated in 2000, is a large-cap cement company with a market cap of Rs 105771.70 crore.

Investment rationale by Macquarie
We believe UTCEM will rebrand cement from CENT’s plants to UTCEM brands post acquisition. UTCEM’s category A brand vs. B/C for CENT could add Rs150-200/t to margins. Also, the plants are running at 70-75% utilisation and with some capex can be ramped up to +90% utilisation. These low hanging fruits can drive the margins of CENT’s assets closer to UTCEM’s margins post acquisition. While trailing earnings suggest 4-5% EPS dilution for UTCEM, an increase in efficiency and brand premium should make the deal EPS accretive.

Action and recommendation Maintain Outperform.