Prabhudas Lilladher recommended hold rating on Ultratech Cement with a target price of Rs 4000 in its research report dated July 19, 2018.
Prabhudas Lilladher's research report on Ultratech Cement
Ultratech (UTCEM) reported Q1FY19 earnings below our estimates due to lower than expected realisations. Street is betting on sustainable strength in prices (with expansion in margins), led by strong demand and emerging discipline. However, we do not believe that this theme would unfold over next couple of years due to weak quality of demand and long pipeline of capacity addition in the sector.
Outlook
Most importantly, stretched valuations (EV/EBITDA at 15.2x, P/E of 29x FY20e) limits meaningful upside from current levels with limited margin of safety. We maintain HOLD with TP of Rs4000.
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