UltraTech cement share price today: Motilal Oswal says that UltraTech Cement 4QFY21 result was impressive on multiple counts. While volume growth remained above industry, EBITDA/unit was strong at Rs 1328/t (+18% YoY), driving 51% YoY growth in EBITDA. Net debt fell Rs 27 bn QoQ to INR67.2b (0.55x TTM EBITDA). UltraTech Cement has grown its market share further due to high clinker availability, which helped it meet strong demand for OPC cement in 4QFY21. Its India volumes grew 30%/5% YoY in 4Q/FY21, much higher than the 24%/24%/22% growth reported by Dalmia Bharat / Ambuja Cement / ACC.

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Market share gains should continue, aided by the ongoing 20mtpa expansion program, which should drive 11% volume CAGR over FY21-24E. While Motilal Oswal expects industry volumes to decline by 25-30% in the near term due to COVID-related lockdowns, the same should be partly compensated by improved margins as prices have been strong. Motilal Oswal’s earnings estimates for UltraTech Cement for FY22-23E are therefore broadly unchanged. Motilal Oswal estimates 19% EPS CAGR. UltraTech Cement remains Motilal Oswal top large cap pick in the cement sector.

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Motilal Oswal said that While blended realization rose 4% YoY to Rs 5186/t (+1% QoQ), cost surprised positively and was flat YoY at Rs 3857/t (+1% QoQ). Freight and fuel cost were under control, despite the sharp rise in diesel and petcoke prices. Other income fell 70% YoY to INR603m due to a rise in bond yields in 4QFY21. Finance cost fell 25% YoY to Rs 3.8 bn on a sharp reduction in debt. n Consolidated net debt fell further by Rs 27 bn QoQ to Rs 67.2 bn (implying 0.55x TTM EBITDA). Consolidated net debt declined Rs 102.6 bn in FY21, explains Motilal Oswal.

UltraTech Cements' strong pan-India distribution network and preferred supplier status for key Infrastructure projects makes it well suited 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. Motilal Oswal estimated 11%/19% CAGR in consolidated EBITDA/PAT over FY21-23E, driven by 11% CAGR in volumes, lower operating costs, and lower interest costs. The valuation is reasonable at 12.9x FY23E EV/EBITDA – a 10% discount to its last five years’ average.