The share price of cement maker UltraTech Cement rallied over 5 percent to hit a fresh 52-week high of Rs 5,829.90 apiece in early trade on Monday after the company reported strong earnings for the third quarter of fiscal 2021.
The company’s consolidated net profit during Q3FY21 jumped 122.56 percent to Rs 1,584.34 crore from Rs 711.84 crore, YoY. Revenue from operations rose 17.4 percent to Rs 12,254.1 crore from Rs 10.439.3 crore, YoY.
Domestic sales volume during the quarter grew 14 percent to 23.88 mt compared with 20.90 mt in the year-ago quarter.
Read here: UltraTech Cement Q3 net profit jumps 122% to Rs 1,584 crore; Domestic volume growth at 14%
Here are the views of brokerages on the stock and on the company’s December quarter earnings:
CLSA
“Ultratech (UTCEM) reported strong 3Q results on higher volume and better profitability. Ongoing strength in rural, improving infrastructure and tier 2/3 cities provides visibility on strong FY22 growth. However, the rise in fuel costs is likely to weaken profitability,” CLSA said.
UltraTech Cement is CLSA’s top pick among large-cap cement companies given its strong volume growth potential driven by capacity additions and its focus on reducing costs. With near-term margin pressure and a fair valuation (largely in line with its median), the brokerage firm sees a limited absolute upside.
CLSA maintained an 'Outperform' rating on the stock and raised the target price to Rs 6,230 per share from Rs 6,000 earlier.
Morgan Stanley
The brokerage house maintained an 'Overweight' call with a target price of Rs 6,300 per share as the company’s Q3 earnings were better than consensus on all fronts.
Morgan Stanley sees a near-term pause in the earnings upgrade and expects returns to moderate. It said that it still likes the company as a play on cement demand recovery cycle and for improving RoEs and balancesheet.
Motilal Oswal
The company’s strong pan-India distribution network and preferred supplier status for key infrastructure projects places it well to tap into expected growth in both retail and institutional (non-trade) cement demand in India. While it is ramping up its under-utilized acquired capacities, it also has a strong pipeline of expansion projects that offers strong growth visibility, the brokerage said.
It reiterated 'buy' on the stock.
Phillip Capital
UltraTech Cement still has a phenomenal scope of improving its earnings profile directionally and that continues to play out. This is the company’s 8th quarter in a row when the company has either surprised or reported in-line results. However, as we see, the journey from here on for UltraTech Cement will be more towards consistency of earnings profile leading to a firmer, more sustainable and structural rerating of its valuation multiples, the brokerage said.
"For now, we don’t see any further major potential upgrades in our estimates for FY22," it added. The brokerage maintained a 'Buy' rating with a target price of Rs 6,500 per share.
Yes Securities
Yes Securities has upgraded UltraTech Cement to 'Buy' from 'Add' and raised the target price to Rs 6,373 per share from Rs 5,175 earlier.
“Ramp up in Century and UltraTech Nathdwara assets along with lower energy costs translated into beat versus our estimates. Post exceptional operating performance during Q3FY21, we upgrade our EBITDA estimates by 12.1%/6.5%/6.8% for FY21E/FY22E/FY23E respectively. We factor in volume/EBITDA CAGR of 10.3%/3.7% over FY21E-FY23E,” Yes Securities said.
Catch all the latest updates from the stock market here.
