UltraTech needs more than volumes
₹2,551 crore slightly missed Bloomberg’s consensus estimate hurt by higher operating expenses. Positively, UltraTech is gaining market share. Consolidated sales volume grew 16% year-on-year in Q2 to 26.7 million tonnes (mt).
This is likely to be 300-350 basis points higher than the industry’s volume growth, said Emkay Global Financial Services. After Q2, UltraTech’s shares are up 2.2% over the last two trading sessions. Also, its commitment to capacity expansions gives comfort.
It increased its cement capacity by 2.5 million tonnes per annum (mtpa) last quarter. UltraTech aims to reach 159.65mtpa by June-end (FY25) from the current grey cement capacity of 132.45mt. The management is expected to announce its third phase of expansion before 2023 ends.
Investors’ excitement about the capacity expansions is evident; shares are up 34% in the past one year. The stock trades at FY25 EV/Ebitda of 15 times, a discount to close peer Shree Cement, but valuation is not cheap. All eyes are now on if volumes and realizations growth would be in tandem."Exciting news! Mint is now on WhatsApp Channels
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