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UltraTech Cement, led by chairman Kumar Mangalam Birla, is preparing to invest ₹13,000 crore ($1.74 billion) in its third growth phase, aiming to expand total capacity to 182 million tonnes per annum (mtpa). The company plans to achieve this ambitious goal by setting up four greenfield and four brownfield plants, along with four greenfield bulk terminals. Commercial production from these new capacities is expected to commence from FY26, which will elevate UltraTech’s global cement capacity to 187 mtpa.
The company has another expansion plan slated for presentation in December, targeting a 200 mtpa production capacity. This would give UltraTech a significant lead of 60 mt over Adani Cement’s capacities. Despite the planned expansion, Centrum Broking forecasts that UltraTech will be debt-free by FY24 and has revised its target stock price to ₹9,564.
For FY24, UltraTech reported a substantial 69.5% year-on-year rise in Q2 net profit at ₹1,282 crore ($171 million) and a revenue growth of 15.3% to Rs 16,012 crore ($2.14 billion). However, due to higher-than-expected operating costs, the EBITDA estimate was reduced by 3%-4% for FY24, FY25 and FY26.
UltraTech’s stock has seen a rally of around 17% this year. The company’s grinding capacity is projected to increase to 165 mtpa in phases over FY25E-FY26E. As India’s largest cement producer, UltraTech closed at ₹8,210.65 ($109.7) in the previous session.
Brokerage firms maintain a positive outlook on the company; InCred maintains an ‘Add’ rating with a target price of ₹9,500 ($126.9), Axis Securities gives a ‘Buy’ call with a target price of ₹9,030 ($120.6), and Elara Securities holds an ‘Accumulate’ call with a target price of ₹9,098 ($121.5). UltraTech is Axis Securities’ top pick of the week.
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