Hold UltraTech Cement, target Rs 4,801: Edelweiss Securities
Hold UltraTech Cement at a price target of Rs 4,801.
Edelweiss Securities has a hold call on UltraTech Cement with a target price of Rs 4,801.
The current market price of UltraTech Cement is Rs 4,613.45.
Time period given by the brokerage is one year.
View of the brokerage: The robust Q4FY19 performance reported by the largest cement player UltraTech Cement (UTCL) resembled the dance of an elephant.
Consolidated EBITDA at Rs 23.3bn (up 31 per cent YoY) beat our Rs 23.0bn estimate (highest on the Street) as marginal revenue disappointment was offset by softer costs.
Given recent improvement in the cement pricing scenario, we believe UTCL’s performance could improve further; factoring the same, we revise up FY20E and FY21E EBITDA 12 per cent and 17 per cent, respectively.
However, under our valuation framework (14x EV/EBITDA rolling over to Q2FY21E EBITDA) the stock offers limited upside (given the recent sharp run). We, therefore, maintain ‘HOLD’ with revised target price of Rs 4,822 (Rs 3,971 earlier).
We continue to stay positive on the cement sector factoring the industry clinker utilisation up-cycle and maintain that UTCL will be its prime beneficiary.
The current market price of UltraTech Cement is Rs 4,613.45.
Time period given by the brokerage is one year.
View of the brokerage: The robust Q4FY19 performance reported by the largest cement player UltraTech Cement (UTCL) resembled the dance of an elephant.
Consolidated EBITDA at Rs 23.3bn (up 31 per cent YoY) beat our Rs 23.0bn estimate (highest on the Street) as marginal revenue disappointment was offset by softer costs.
Given recent improvement in the cement pricing scenario, we believe UTCL’s performance could improve further; factoring the same, we revise up FY20E and FY21E EBITDA 12 per cent and 17 per cent, respectively.
However, under our valuation framework (14x EV/EBITDA rolling over to Q2FY21E EBITDA) the stock offers limited upside (given the recent sharp run). We, therefore, maintain ‘HOLD’ with revised target price of Rs 4,822 (Rs 3,971 earlier).
We continue to stay positive on the cement sector factoring the industry clinker utilisation up-cycle and maintain that UTCL will be its prime beneficiary.
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