HDFC Securities is bullish on UltraTech Cement has recommended buy rating on the stock with a target price of Rs 4915 in its research report dated July 29, 2020.
HDFC Securities' research report on UltraTech Cement
UltraTech reported strong earnings beat in 1QFY21, driven by robust fixed cost reduction. Consolidated revenue/EBITDA/APAT fell 33/30/30% YoY to Rs 76.33/20.75/9.03bn. Volume fell 32% YoY, on sharper volume decline across the south and Maharashtra. UltraTech also reported robust fixed cost control in 1Q, which cushioned the earnings impact. Strong margins and working capital reduction continues to help UltraTech reduce leverage. As retail sales remain less impacted and as non-trade expected to pick up in 2HFY21E, we expect slower volume decline of 16% in FY21 and 21% rebound in FY22E.
Outlook
We expect stable realisation YoY, subdued energy cost outlook, and healthy cost controls to drive 5% EBITDA CAGR (FY20-23E), despite a 13% decline in FY21E. We maintain BUY with a target price of Rs 4,915.
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