Arihant Capital recommended accumulate rating on Ultratech Cement with a target price of Rs 4660 in its research report dated July 29, 2020.
Arihant Capital 's research report on Ultratech Cement
Ultratech witnessed slowdown in Q1FY20 with the advent of Corona virus and nation-wide lockdown. Consolidated revenue stood at Rs 7,634 Cr, a decline of 33.2% YoY/29.0% QoQ, EBITDA stood at Rs 2,075 Cr, shrinking by 29.7% YoY/15.1% QoQ and PAT at Rs 797.4 Cr decreasing by 37.8% YoY/75.4% QoQ. The sharp decline in revenue could be attributed to the Covid-19 induced lockdown which saw sales volume decline by 22% (17.86 million tonne in Q1FY20 to 13.94 million tonne). The net debt fell down to Rs 14,651 Cr in Q1FY21 from Rs 16,680 Cr in Q1FY20. The cement major is on the right track to integrate the acquired assets over last financial year into its internal brand and units.
Outlook
Hence, we upgrade upwards our exit EV/EBITDA multiple 17.0x of its FY22E estimates, which yields a revised target price of Rs 4,660 and maintain ACCUMULATE rating.
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