UltraTech Cement's March quarter results came in-line with Street estimates, with the company's consolidated EBITDA or earnings before interest, tax, depreciation and amortisation rising 8 percent year-on-year and 42 percent quarter-on-quarter to Rs 3,320 crore in the fourth quarter (Q4FY23).

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The company's consolidated net profit dipped 36 percent to Rs 1,670 crore for the March quarter. It was Rs 2,620 crore in the same period a year ago. The firm's board has recommended a dividend of Rs 38 per equity share of Rs 10 each for fiscal FY23.

UltraTech's management expects cement prices to remain stable in the near term, but benefits from input cost deflation would kick-in in the coming quarters.

Net debt declined Rs 1,200 crore YoY to Rs 2700 crore, as of March 2023. Factoring-in the higher volume growth, brokerage Emkay Global has increased its FY24-25E EBITDA by 2 percent.

Given the company’s strong growth/capex plans, extensive pan-India presence, premium brand positioning, and focus on cost efficiencies, the brokerage has raised its target EV/E to 15 times from 13 times earlier, in line with the past five-year average.

Brokerage HDFC Securities continues to like the company for its robust growth and margin outlook and balance sheet management.

UltraTech has delivered a strong 14/23 percent YoY/QoQ volume growth, led by healthy demand and a gain in market share. The company has also tightened its working capital (to net cash in March 23) during H2 of FY23, which bloated in September 2022.

What should investors do?

UltraTech's demand environment continues to stay strong and the company expects to outperform industry growth by 400-500 basis points.

Emkay Global has a 'Buy' rating on the stock, with a revised Mar-24E target price of Rs 8,500 per share.

HDFC Securities has maintained a 'Buy' call on UltraTech with an unchanged target price of Rs 8,670 (16 times Mar-25E consolidated EBITDA).

Brokerage Elara Securities (India) reiterates 'accumulate' and largely retain its earnings estimates for FY24 and FY25. "We roll over to March 2025E from December 2024E and thus, our target price is raised to Rs 8,638 from Rs 8,325 based on 15.5 times (unchanged) FY25E EV/EBITDA," it stated.

Shares of UltraTech Cement closed 0.52 percent higher at Rs 7,540 apiece in Friday's trade. The stock has risen 10.54 percent in the last six months and 7.44 percent on a year-to-date basis.

UltraTech's stock has an average broker target of Rs 7,786.64, implying an upside potential of 3.05 percent from the current market levels.