UltraTech Cement Shares Trades Flat Despite 16% Growth in Q2 Sales; Brokerages Maintains ‘BUY’ Rating

On October 3, the stock of UltraTech Cement saw only a marginal increase, despite the company reporting a 16% growth in consolidated sales volume for the July-September quarter and receiving an ‘overweight’ rating from Morgan Stanley.

In a regulatory filing on October 2, UltraTech Cement revealed its consolidated sales volumes for the quarter, amounting to 26.69 million tonnes, with total sales volume for the domestic market, including grey and white cement, witnessing a 15% year-on-year increase at 25.66 million tonnes.

Morgan Stanley, with a positive outlook on the stock’s potential from current levels, has set a target price of Rs 9,300.

“The Q2 sales volume figures indicate an 18% YoY growth in domestic grey cement volumes for the first half of FY24. Given this robust volume growth, it appears that the company’s market share gains remain uninterrupted,” noted Morgan Stanley.

In a recent sectoral update focused on building materials, Jefferies maintained its ‘buy’ rating on UltraTech Cement’s stock.

Jefferies observed strong cement demand levels in August, though September was affected by rainfall. Overall, the brokerage expects double-digit demand growth for cement in the current fiscal year.

“Strong exit prices in the July-September quarter and upcoming price hikes will counteract concerns about energy cost inflation. Price hikes announced for October range from Rs 10-50/bag (up to 15%) across regions. While cost increases are a concern, continuous price hikes have reduced the risk of downgrades,” Jefferies added.

As of 1 pm on the NSE, UltraTech Cement’s stock was trading at Rs 8,293.90, up Rs 39.05, or 0.47%.

In its results for the April-June quarter, the company reported a 17% YoY increase in revenue from operations to Rs 17,737.1 crore. Net profit for the quarter increased by 6.8% YoY to Rs 1,690 crore. Operating profit margins contracted by 300 basis points YoY to 17% for the quarter.

UltraTech Cement, India’s largest cement manufacturer by market capitalization, is a subsidiary of Grasim Industries, which is in turn a subsidiary of the Aditya Birla Group. The company’s product range includes ordinary Portland cement, Portland pozzolana cement, and other variants.

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