Motilal Oswal has reiterated its Buy rating on UltraTech Cement and set a target price of Rs 13,800, signalling an upside of roughly 16% from the current market price of Rs 11,903. The brokerage believes the company’s fundamentals remain solid.
The firm reported that UltraTech Cement’s first‑quarter FY27 operating performance was in line with its estimates. Consolidated revenue rose by about 16% year‑on‑year to Rs 246 billion, while EBITDA grew by around 14% to Rs 50 billion.
Adjusted profit after tax also increased by about 16%, reaching Rs 26.1 billion. These gains reflect the company’s efficient cost management and strong sales momentum.
Sales volume climbed roughly 12% year‑on‑year to 41.3 million tonnes. Blended realisation per tonne grew about 3% year‑on‑year and quarter‑on‑quarter to Rs 5,967.
EBITDA per tonne saw a modest 1% increase year‑on‑year, reaching Rs 1,214. This indicates the company is maintaining healthy margins despite market pressures.
Management remains constructive about the medium‑term demand outlook, citing a robust pipeline of infrastructure projects, healthy housing demand, urban redevelopment, and commercial real‑estate activity. These factors support continued growth.
UltraTech Cement aims for double‑digit volume growth in grey cement for FY27. The target aligns with the company’s long‑term expansion strategy.
However, the brokerage warns that near‑term cost pressures could weigh on profitability. Higher fuel costs, the monsoon season, and scheduled kiln maintenance are expected to raise variable costs by Rs 130‑140 per tonne sequentially.
Profitability is projected to be under pressure in Q2FY27, with operating expenses likely peaking during the quarter. Motilal Oswal expects a temporary dip in earnings before a rebound.
Despite short‑term challenges, the brokerage believes UltraTech Cement will benefit from its large scale of operation, strong brand value, and effective cost‑control measures. It forecasts consolidated revenue, EBITDA, and PAT to grow at CAGRs of 12%, 17%, and 19% respectively over FY26‑28.
The firm also expects the company’s net debt‑to‑EBITDA ratio to stay below 1.0x. The ratio was 0.87x at the end of Q1FY27, down from 0.94x at the end of FY26, indicating improving leverage.
In summary, Motilal Oswal sees UltraTech Cement as a resilient player with solid earnings growth, a favourable demand outlook, and disciplined financial management, justifying its bullish stance.