Ultratech Cement: Target Price Set at Rs 13,835 by Prabhudas Lilladher

UltraTech Cement Remains a Bright Spot Amid Adverse Macro Conditions

In a recent research report, Prabhudas Lilladher has reaffirmed its positive stance on UltraTech Cement (UTCEM) despite challenging macroeconomic conditions. The firm's optimism is rooted in several factors, including the cement industry's ability to offset near-term cost inflation through price hikes. The incremental cost inflation that is anticipated in the future will necessitate marginal price hikes, which are expected to be implemented in the second quarter of FY27E.

The recent change in stance by peers is expected to benefit UTCEM, as it continues to advance with systematic capacity additions. Additionally, Prabhudas Lilladher remains constructive on domestic cement demand, which is currently growing at a rate of approximately 6-7%. This growth is supported by infrastructure spending and housing activity. According to channel checks, the recent price hikes have been well received across markets, with some rollbacks observed.

On the cost front, UTCEM remains relatively insulated from Middle East disruptions due to its reliance on US pet coke and coal. Ongoing initiatives such as renewable energy share expansion (which currently accounts for just ~8% of project costs), domestic fuel mix optimization, and lead distance reduction will continue to support its cost competitiveness. The integration and efficiency improvement projects at India Cements and Kesoram are progressing as planned, with India Cements' profitability expected to improve to INR1,000/t by the end of FY28E.

Read also: Titan Stock Rides Bullish Sentiment Amid Optimism for Jewelry Growth

Outlook and Recommendations

Prabhudas Lilladher expects UTCEM's volume/EBITDA to deliver a compound annual growth rate (CAGR) of 11%/17% over FY26-28E. The stock is currently trading at an enterprise value (EV) multiple of 16.8x/14.6x FY27E/28E EBITDA. In light of this, the firm maintains a 'BUY' rating with a target price of INR13,835, valuing the stock at 18x EV of Mar'28E EBITDA.