[ad_1]
UltraTech Cement Ltd is a large-cap firm within the cement business with a market cap of ₹163,931.84 Crore. The corporate’s Board of Administrators has authorized a cement capability enhance of twenty-two.6 million tonnes at a price of Rs129 billion, which the corporate plans to complete by FY25. Primarily based on the brand new CAPEX disclosed, ICICI Securities has maintained a purchase name on UltraTech Cement shares with a goal value of ₹8,500, representing a 49.71 per cent upside potential from the final traded value of ₹5,677.60.
ICICI Securities has stated in a report that “UltraTech Cement’s (UTCEM) board has authorized cement capability growth of twenty-two.6mnte (~17% of anticipated FY23 India operations base of 130.9mnte) at a capex of ~Rs129bn (US$76/te which the corporate expects to finish by FY25. The recent spherical of capability growth will take UTCEM’s complete India gray cement capability to ~154mnte from present 114.6mnte, implying 10.4% CAGR in the course of the subsequent three years. Factoring-in the stated growth, business has introduced ~110mnte capacities to be added over the subsequent three years with UTCEM alone including 35% of it and practically two-thirds of the additions by the top-4 group.”
The brokerage has claimed that “Therefore, this could result in higher business consolidation and higher pricing, in our view. Apart from, based mostly on historic developments, many of those capacities might get delayed and pace of execution would rely upon demand progress. We consider UTCEM, with its massive pan-India diversified market presence, premium model positioning, well timed capability creation, elevated value efficiencies and powerful steadiness sheet is healthier positioned to achieve market share / enhance margins within the medium time period. We proceed to worth UTCEM at 15x FY24E EV/E and keep BUY score with a goal value of Rs8,500/sh. Key threat: Decrease demand / pricing, and sharp value escalations.”
ICICI Securities has additionally stated that most of the introduced 110mnte capability additions might get delayed on account of varied causes (based mostly on historic developments). For instance, current value pressures might shrink profitability of the business members, particularly for mid and smaller corporations within the short-term, and the resultant money flows obtainable for capex might shrink. This might result in delay in implementation of the introduced expansions.
The views and suggestions made above are these of particular person analysts or broking corporations, and never of Mint.
[ad_2]
Source link