Accumulate Ultratech Cements - Q4FY2013 Result Update - Kotak

Result overview: Revenues for Q4FY13 were led by improvement in average cement realizations but was also impacted by decline in cement volumes on yearly basis. Costs have witnessed a decline due to fall in imported coal prices and lower other expenditure per tonne. Despite lower than expected demand growth, cement prices recovered during Q4FY13 till mid-March, 13. Though cement prices have come off in few regions during April, 2013 due to lack of demand but with pre-election spend expected in few states, demand is expected to grow. We also expect cement prices to recover post monsoons. We thus continue to maintain ACCUMULATE rating on Ultratech Cements since we expect company to benefit from the volume growth going forward coupled with improvement in cement prices along with its ability to grow through organic or inorganic means.

At current price of Rs 1872, stock is trading at 13.9x P/E and 7.9x EV/EBITDA on FY14 estimates. We maintain our estimates and continue to value Ultratech Cements at 9x EV/EBITDA on FY14 estimates. We maintain our price target of Rs 2126 and continue to recommend ACCUMULATE rating on the stock on account of its strong balance sheet, ability to benefit from volume and pricing increase as well as ability to grow through organic or inorganic means.

Source : Equity Bulls

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