(Rating: BUY, TP: Rs8,600, Upside: 15.3%)
- Ultratech delivered strong numbers on all front wherein volumes/EBITDA for the Q1FY22 grew by 47%/54.9% on YoY basis while it beat our estimates by 11.8%/40.6% which was driven lower clinker cost and higher than expected net realisations.
- We upgrade our EBITDA estimates by 12.6%/13.5% for FY22E/FY23E respectively, primarily on the back of 1. Realigning raw material, fuel and transportation cost which we estimated higher and 2. Better pricing outlook as compared to our previous expectations. Considering progressive deleveraging (estimated Net debt -ve by FY23E) and with upgraded EBITDA we believe Net debt/EBITDA is set to decline faster and turn negative 0.06x from 0.66x over FY21-23E (Q1FY22 Net Debt/EBITDA 0.44x).
- Currently, at CMP of Rs7460/share, Ultratech trades at 14.2x of FY23E EV/EBITDA. On the back of higher demand outlook and better than expected profitability we assigned 16x FY23E EV/EBITDA which translates in price target of Rs8,600/share with potential upside of 15.3% upside (previous TP of Rs7,540/share). We maintain our BUY rating on stock.
Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs. 7494 as compared to the previous close of Rs. 7459.85. The total number of shares traded during the day was 31260 in over 6923 trades.
The stock hit an intraday high of Rs. 7630 and intraday low of 7474. The net turnover during the day was Rs. 235456432.