Axis Securities has issued a ‘Buy’ recommendation for UltraTech Cement Limited, setting a target price of ₹13,510 per share. This implies a potential upside of 33% from its current market price of ₹10,128 (as of February 28, 2025). The brokerage remains optimistic about Ultra Tech’s growth prospects, backed by strong market positioning, strategic expansion, and improving operational efficiencies.
Key Investment Highlights
1. Expansion Into Wire & Cable Business
- UTCL is diversifying by entering the Wire & Cable segment with an ₹1,800 crore investment.
- A new manufacturing plant in Bharuch, Gujarat, is expected to begin commercial operations by December 2026.
- The Wires & Cables market has grown at a 13% CAGR from FY19 to FY24, offering a strong opportunity.
- The business is expected to achieve a Return on Capital Employed (ROCE) of 25% by FY30-31.
2. Continued Dominance in the Cement Industry
- UltraTech remains committed to its core cement business, with capital employed in this segment projected to reach ₹1,00,000 crore by FY27.
- Cement demand is expected to grow steadily due to infrastructure development, urbanization, and real estate growth.
- The company’s market share is expected to rise from 25% to 28% over the next three years.
3. Strong Financial Growth Projections
Axis Securities forecasts impressive financial growth for UTCL over FY24-FY27:
- Revenue CAGR of 11%
- EBITDA CAGR of 19%
- PAT CAGR of 28%
- EBITDA margins expected to increase from 17% in FY25 to 22% in FY27.
Financial Projections (FY25E-FY27E)
| Financial Metric | FY25E | FY26E | FY27E |
|---|---|---|---|
| Revenue (₹ Cr) | 73,356 | 85,403 | 96,282 |
| EBITDA (₹ Cr) | 12,683 | 17,720 | 21,328 |
| PAT (₹ Cr) | 6,913 | 10,108 | 12,812 |
| EPS (₹) | 239 | 349 | 443 |
| PE Ratio (x) | 42 | 29 | 23 |
| ROE (%) | 11% | 14% | 15% |
| ROCE (%) | 12% | 16% | 18% |
UltraTech Cement Stock Performance
- 52-week high: ₹12,145
- 52-week low: ₹9,250
- Current Market Price (CMP): ₹10,128
- Target Price: ₹13,510 (Upside potential: 33%)
Sector Outlook: Why UltraTech Cement Is a Strong Bet?
- The Indian cement industry is poised for steady growth, driven by government infrastructure spending, rising real estate demand, and increased urbanization.
- Cement demand is expected to grow at a 7-8% CAGR over FY24-FY27.
- Industry consolidation is expected to benefit large players like UltraTech, enhancing their pricing power and operational efficiency.
Potential Risks
- Lower cement prices or weaker-than-expected demand could impact revenue.
- Rising raw material and fuel costs may affect profit margins.
- Diversification into the Wire & Cable business carries execution risks.
Conclusion: A Strong Buy With 33% Upside
With a solid expansion strategy, strong financial outlook, and market leadership, UltraTech Cement is well-positioned for long-term growth. Axis Securities’ target price of ₹13,510 highlights the company’s strong upside potential.
Investors looking for a long-term opportunity in the cement sector should consider Ultra Tech Cement as a strong buy.