Add UltraTech Cement Ltd For Target Rs. 7,538 - Choice Broking
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Key Rationale:
The Target Price of Rs. 7,538 is expected for FY24..
The Volume of Ultratech Cements Limited for Q4FY22 came in at 27.7mnt which is flattish YoY and up by 20% QoQ basis due to positive trajectory for cement demand as Infrastructure, rural markets and now urban housing has started showing good transition for cement. The Sales Realisation/t came in at INR 5,964 which is up by 10% YoY and 1% QoQ basis.
Total Cost/t is INR 4,585(Up by 19% YoY and flattish QoQ basis).
Increase in Power & Fuel charges and Freight charges led to the fall in EBITDA/t to INR 1,110 (down by 17% YoY and up by 6% QoQ)
We expect Ultratech Cements to show moderately healthy volume growth of ~7% in FY23E and ~6% in FY24E led by higher capacity, cost efficiencies along with increase in demand from Government Infrastructure activities, affordable housing projects and improvement in demand from commercial and real estate.
UTCEM is currently available at 13.6x of our FY24E EBITDA estimates which is at a discount of 10% from our target EV/EBITDA multiple of 15x.
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