UltraTech Cement (UTCEM) reported an 8%/7% YoY growth in volume/blended realization. EBITDA margin declined by 339bp YoY to 22.6% due to energy cost inflation, which was further accentuated by higher maintenance and employee costs. EBITDA remained largely flat YoY at Rs 27.1 billion (-18% QoQ).

"Market share gains should continue, aided by the ongoing 20mtpa expansion program (1.2mtpa commissioned in Oct'21), which should drive a 10% volume CAGR over FY21-24E," stated Motilal Oswal Institutional Equities.

"We estimate an 12%/19% CAGR in consolidated EBITDA/adjusted PAT over FY21-24E, driven by 10% volume CAGR, better realizations, and lower interest costs. Higher fuel prices remain a key risk to earnings growth. The stock trades at 14.9x/12.6x FY23E/FY24E EV/EBITDA (v/s its 10-year average one-year forward EV/EBITDA of 14.3x). We value UTCEM at 16x Sep'23E EV/EBITDA to arrive at our TP of INR8,700. We reiterate our Buy rating," the broking firm added. 

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