Emkay Global Assigns UltraTech Cement a Target Price of Rs 13,000

UltraTech Cement Reports Strong EBITDA Growth

UltraTech Cement (UTCEM) has released its latest consolidated earnings report, showcasing a significant increase in EBITDA to Rs56bn, a growth of 21% year-over-year (YoY) and 43% quarter-over-quarter (QoQ). This performance is largely in line with the expectations of Emkay Global Financial, a leading research firm.

The company's domestic grey cement segment saw a growth of 9.3%, outpacing the industry growth of approximately 7%. This indicates that UltraTech Cement is continuing to gain market share, a trend that the management expects to persist in the upcoming fiscal year 2027. Despite the challenges posed by the US-Iran conflict, which resulted in a cost impact of approximately Rs50 per ton, the company's total unit operating cost remained flat year-over-year and decreased by 2% sequentially.

The swift ramp-up of acquired assets is believed to be the primary driver of this cost discipline. Additionally, a better pricing environment in the non-trade segment and the full brand transition of acquired assets contributed to an improvement in grey cement realisation of approximately 2.5% quarter-over-quarter. As a result, EBITDA per ton stood at Rs1,253, surpassing Emkay's estimate of Rs1,157 and significantly higher than the Rs1,126 reported in Q4FY25 and Rs1,007 in Q3FY26.

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UltraTech Cement continues to focus on expanding its capacity, aiming to achieve a production level of over 240 million tons per annum (mtpa) by fiscal year 2028. This strategic move is expected to provide a safe haven for the company amidst the current volatile market conditions, making it a top pick for investors seeking to capitalize on India's infrastructure growth story.

Emkay's Revised Estimates

Emkay Global Financial has revised its estimates for UltraTech Cement, increasing its FY27E EBITDA estimate by approximately 11% to Rs62.2bn. The company's valuation remains unchanged at 18x March 2028 estimated enterprise value to earnings before interest, tax, depreciation, and amortization (EV/EBITDA), with an unchanged target price of Rs13,000. The research firm maintains its "BUY" recommendation for UltraTech Cement, citing its ability to deliver cost savings and strengthen its market share position.

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