Target: ₹12,190

CMP: ₹10817.35

Ultratech Cement’s Q2-FY25 consolidated sales volume grew by about 4 per cent y-o-y to 32mt. As per Ultratech Cement, H1 was below par due to heat wave, general elections in India and higher monsoon rains during the year. However, it expects 2HFY25F to be better, with rural demand already showing signs of a recovery which will benefit further from healthy monsoons.

It doesn’t expect any slowdown in cement demand in India and a long-term growth rate of 7-8 per cent seems sustainable, driven by India’s economic growth. Ultratech highlighted that it has gained market share in southern and eastern regions of India and will be chasing profitable growth. The company expects double-digit volume growth for the industry in H2-FY25F and maintained its guidance to outperform the industry.

Grey cement realisation was down by about 3 per cent q-o-q while the company highlighted that prices have improved marginally in Oct 2024 to ₹354/bag from ₹348/bag Q2-FY25 average.

We retain Add on the stock as we roll forward to Mar 2026 (Sep 2025 earlier) target price of ₹12,190 on 18x EV/EBITDA. We prefer UTCEM, given the visibility on the volume front and improvement in profitability. Weak demand and pricing, rise in input costs and delay in expansion are downside risks.

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