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Should investors buy, sell, or hold UltraTech Cement after Q4 earnings? Here's what brokerages say

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JPMorgan has a 'neutral' rating on the stock with a target price of Rs 6,890 per share. It says that despite the fact that the company has beat the first-quarter expectations, its cost pressures are very high. Here's what other brokerages have to say on UltraTech Cement's stock and Q1 earnings:

Should investors buy, sell, or hold UltraTech Cement after Q4 earnings? Here's what brokerages say
The shares of UltraTech Cement touched a 52-week high of Rs 7,630 on Friday morning, a day after the cement-maker reported its first-quarter results.
UltraTech Cement reported a sharp 114 percent jump in its consolidated net profit for the quarter ended June 2021 at Rs 1,700 crore. It had reported a profit of Rs 794.2 crore in the subsequent quarter of the previous fiscal.
UltraTech is the largest cement-maker in India with a domestic capacity of 111.4 metric tonnes. This is 23 percent of the total market, giving it a leadership position in most regions.
Its revenues also jumped 54.2 percent to Rs 11,830 crore as against Rs 7,671.1 crore, YoY. It reported a growth of 47 percent in its sales volume that grew to 20.53 million tonnes.
The net profit of the company beat the CNBC-TV18 analysts' poll estimates of Rs 1,428 crore. But its revenue was slightly lower than what analysts had estimated (Rs 11,980 crore).
The company's EBITDA increased nearly 60 percent to Rs 3,307.5 crore from Rs 2,077.7 crore. Its EBITDA margin also improved by 88 basis points to 27.96 percent (from 27.08 percent, YoY). Its capacity utilization also improved to 73 percent, as compared to the 46 percent a year ago.
Here's what brokerages have to say on UltraTech Cement's stock and Q1 earnings:
JP Morgan
JPMorgan has a 'neutral' rating on the stock with a target price of Rs 6,890 per share. It says that despite the fact that the company has beat the first-quarter expectations, its cost pressures are very high.
The second half of the financial year needs large hikes for positive surprises, the brokerage added.
ICICI Direct
"Market leadership, strong brand with highest retail presence and robust balance sheet justify UltraTech's premium valuation," ICICI Direct said in a report.
We are positive on the company, it said, majorly because of its target to become net debt-free by FY23E and expected ROCE of 17 percent-plus.
ICICI Direct has a 'buy' rating on the stock with a target price of Rs 8,700.
Macquarie 
Macquarie has a 'outperform' rating on the stock with a target price of Rs 8,542 per share on the backs of its expansion projects. The brokerage expects the company to give an industry-leading growth over FY21-24.
It said that the sustained cost improvement and balance sheet deleveraging will support the earnings and valuations of the company.
HDFC Securities
HDFC Securities also has a 'buy' rating on the stock with a higher target price of Rs 8,155 on the backs of the company's best-ever consolidated EBITDA margin.
Amidst lower QoQ sales due to the impact of lockdown, robust pricing, and health cost controls moderated its consolidated net sales and EBITDA decline to 18 and 10 percent QoQ, resulting in a rise of 54 and 59 percent YoY on a low base.
"We continue to like UltraTech for its strong volume focus along with superior margin delivery and working capital (WC) controls," the brokerage said.
Yes Securities
UltraTech has beat our volumes/EBITDA estimates by 11.8 and 40.6 percent on a YoY basis, which was driven by lower clinker cost and higher than expected net realisations, Yes Securities said.
The brokerage has upgraded its EBITDA estimated by 12.6 and 13.5 percent for FY22E and FY23E, respectively. It has done so on the backs of realigning raw material, fuel, and transportation costs which it had estimated higher. It has also taken into account the better pricing outlook as compared to its previous expectations.
Currently, UltraTech is trading 14.2 times the forward estimates of its FY23 earnings, it said. "On the backs of higher demand outlook and better than expected profitability we assigned 16x FY23E EV/EBITDA which translates in a price target of Rs 8,600 per share with potential upside," the brokerage said.
Yes Bank has a 'buy' rating on the stock, with a target price of Rs 8,600.
CLSA
The brokerage has a 'outperform' call on the stock and it has raised the target price to Rs 8,000 from Rs 7,735. It said that while its profit numbers exceeded expectations and the EBITDA is 15 percent higher than expectations, cost inflation may impact UltraTech's earnings.
The company's EBITDA/tonne increased 17 percent QoQ, above our estimates due to lower costs, but we expect profitability to taper down, the brokerage said.
The company is likely to turn net cash positive by FY24 and its risk-reward ratio is fair at its current valuation, it said.