UltraTech Cement shares rise 2% post-Q2 results; brokerages divided on outlook amid fuel and energy cost pressures

At the time of filing the report at around 12.40 pm, the stock was trading at Rs 10,806, up Rs 156 or 1.46 per cent. UltraTech Cement Q2FY27 results UltraTech Cement reported a 21.27 percent increase in consolidated profit to Rs 1,501.38 crore in the July-September quarter of FY27, helped by higher sales volume, cost optimisation, and focus on premium products. The Aditya Birla Group flagship company had posted a net profit of Rs 1,237.98 crore in the July-September period a year ago, according to a regulatory filing.

Revenue from operations was up 18.81 percent at Rs 23,295.07 crore in the reporting quarter from Rs 19,606.93 crore posted in the same quarter of the previous financial year. Total expenses rose 17.8 percent during the quarter, as raw material costs jumped 24 percent. Operating EBITDA, or earnings before interest, taxes, depreciation and amortization, rose by Rs 60 year-on-year to Rs 974 per ton. Ultratech's domestic grey cement sales volumes climbed 13.8 percent to 35.94 million metric tons, aided by a low base and a capex cycle pick-up.

Its consolidated domestic grey cement capacity stood at 204.7 mtpa, as on September-end. UltraTech Cement Share Price Target: What brokerages said Brokerage HSBC retained its 'Buy' rating for Ultratech Cement with a target price of Rs 14,200, stating that the stock's valuation has become more attractive following a meaningful de-rating. The brokerage noted that the stock's one-year forward EV/EBITDA multiple had fallen below its five-year average of 19.8x.

HSBC further highlighted the company's strong volume growth (13.9 percent YoY) despite a sharp rise in fuel costs, which spiked 12 per cent on a quarter-on-quarter basis. It also noted cement price increases in September and October, with further increases indicated over the next two to three months to offset rising costs. The brokerage also pointed out that on the cable and wireless business, the company has committed Rs 11 billion against its planned investment of Rs18 billion.

It also noted that Ultratech Cement is the second largest in installed capacity. JP Morgan on Ultratech Global brokerage firm JPMorgan maintained its 'Overweight' rating and set a target price of Rs 12,900 on the stock. The brokerage said the company's second-quarter EBITDA was in line with its estimates, while volume grew 13 percent, ahead of its expectations. However, EBITDA per metric tonne (MT) missed estimates due to higher costs.

JPMorgan noted that management suggested cement prices can continue to rise, particularly as demand recovers post monsoon and festive season. While cost pressures are likely to remain elevated, higher prices could help the Indian cement sector reverse its recent underperformance, the brokerage stated. Kotak Institutional Equities on Ultratech Kotak Institutional Equities gave a 'Sell' rating on UltraTech Cement with a target price of Rs 8,900, citing uncertainty over fuel and energy prices.

While the company's consolidated EBITDA was broadly in line with the estimates and volume growth, rose 13 percent YoY, exceeded the industry's estimated 10 percent, Kotak said limited visibility on energy costs clouds the near-term outlook. The brokerage trimmed its FY27 EBITDA estimate by 6 percent, mainly due to higher energy prices, while cutting its FY28 and FY29 estimates by a more 3 percent.

It further noted that UltraTech remains on track to expand capacity by another 35 million tonnes per annum (mtpa) over the next two to three years, leading to robust accruals and potential market share gains. It also noted that the wires and cables venture of the company commenced operations in September this year, with 60 percent capex spent as of 2QFY27.