Better pricing offsets weak volume
UltraTech Cement Ltd. (UltraTech), a part of the Aditya Birla Group is the largest producer of grey cement, white cement and ready-mix concrete in India. It has an installed grey cement capacity of 69.3 MTPA. The company is also India’s largest exporter of cement and clinker.
Valuation: We expect revenue/PAT to grow at a CAGR of 21%/18% over FY17-19E owing to steady ramp up in capacities. Further with strong capacities in place, we believe the company is in a position to benefit from any cyclical demand recovery. Hence, we recommend ‘Hold’ with a target price of Rs. 4,514 (based on FY198E EV/EBITDA of 16x).
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