UltraTech Cement Ltd’s shares have fallen by as much as 26% so far this calendar year. Investor concerns are understandable. Cost inflation has been a pressing worry and margins are expected to be under pressure during the first half of financial year 2023 (H1FY23). 
View Full Image Under Pressure Many cement companies are expanding capacity, including UltraTech, which has recently announced a 22.6 million tonnes per annum (mtpa) increase in its capacity by FY25. The completion of this round of expansion will take its grey cement capacity to 159.25mtpa. As such, given the huge capacity additions planned by many companies, there are worries on the utilization levels in the sector and the resultant impact on pricing. Ambit Capital reckons UltraTech is growing capacity at 10% compound annual growth rate (CAGR) through FY25, above industry growth, but this expansion would limit industry clinker utilization to <70% through FY25. "That doesn't bode well for pricing power," according to Ambit. That is not all. Competition worries have heightened with the Adani group entering the sector after the latter decided to purchase Holcim's cement business in India. UltraTech has gained market share over the past decade, but may well find it challenging to reap further market share gains following Adani's entry. Against this backdrop, UltraTech's shares have declined and valuations are lower now. However, that is not exciting enough. "The steep correction in the UltraTech stock has made valuations favourable and it is trading below its 10-year and five-year average EV/Ebitda as well as EV per tonne multiples. Based on FY23 estimates, the UltraTech stock trades at EV/Ebitda and EV per tonne of 14.6 times and $164.1, respectively," said Mangesh Bhadang, analyst at Nirmal Bang Equities. "Even so, given the lack of positive news flow in the near term, a further time correction cannot be ruled out," Bhadang said. As such, a meaningful drop in input costs would be a trigger to watch out for. Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let's define your investment approach. Take the test Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates. More Less
Contents
Why UltraTech Cement stocks are falling?
High fuel costs: – Cement stocks are falling due to high fuel costs, The costs have risen sharply in recent months. It has put pressure on margins and has led to a decline in stock prices. In addition, the strong US dollar has also made cement exports more expensive, further eroding profits.
Should we invest in UltraTech Cement?
They see EBITDA per tonne improving to Rs 1,150 in 2023 and to Rs 1,180 in 2024, from Rs 1,030 in 2022. This implies that they see realization improving in the future. It has also revised its earnings estimate by factoring in higher energy costs in the near term.
Yes. The Ultratech Cement Ltd stock price can go up from 7196.400 INR to 7939.316 INR in one year.
Cement Stocks in India – The Indian cement industry is the world’s second-largest producer after China and is the third-largest consumer. Housing & Real estate consists of 65% share of cement demand followed by Public infrastructure, Industrial Development which is 25% and 10% respectively.
Cement industry is currently going through a structural change as COVID-19 forced many companies to manage their costs effectively. Strong pricing levels across regions and low operating costs helped cement companies in not only overcoming the crisis but also getting back to growth in FY21. In terms of management commentaries many top cement companies have reinstated their CAPEX plans, which were put on hold due to the pandemic, and this shows that the confidence among large cement players is coming back and tough times are largely over.
Over the medium-term cement companies are facing huge cost-related headwinds as most of the cement companies have reported increase in raw material, power and fuel costs backed by soaring energy and logistic costs will pose a challenge in maintaining elevated realisations and profits.
What is the target of UltraTech Cement?
| Date | Stock | Target |
|---|---|---|
| 27 Jul 2022 | UltraTech Cement Ltd. | |
| 26 Jul 2022 | UltraTech Cement Ltd. | 6830.00 |
| 25 Jul 2022 | UltraTech Cement Ltd. | 8500.00 |
| 25 Jul 2022 | UltraTech Cement Ltd. | 6790.00 |
Is UltraTech debt free?
What Is UltraTech Cement’s Net Debt? – You can click the graphic below for the historical numbers, but it shows that UltraTech Cement had ₹116.8b of debt in September 2022, down from ₹140.4b, one year before. However, because it has a cash reserve of ₹29.1b, its net debt is less, at about ₹87.7b. NSEI:ULTRACEMCO Debt to Equity History November 27th 2022
Are cement stocks good for long term?
Investors can take advantage of the current market condition and invest in the cement stocks in India to retain long term benefits from their investments.
Which is better cement JSW or UltraTech?
JSW Cement Ltd is most highly rated for Compensation and benefits and UltraTech Cement is most highly rated for Job security and advancement. Overall Rating.
| Overall Rating | 4.0 | 4.1 |
|---|---|---|
| Compensation and benefits | 3.9 | 3.7 |
| Job security and advancement | 3.8 | 4.0 |
| Management | 3.6 | 3.8 |
| Culture | 3.6 | 3.8 |
Who bought UltraTech Cement?
GAUTAM ADANI’S BIG MOVE – Adani group sought to chase ready-made assets that would immediately give them a big presence in the market. India is the second largest cement producer in the world and accounts for more than 7 per cent of the global installed capacity, according to government data.
Ambuja and ACC have a combined capacity to make at least 66 million tonnes per annum (MTPA). The two companies together have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India. Adani group has in the last couple of years diversified beyond its core business of operating ports, power plants and coal mines into airports, data centres and clean energy.
The group had last year set up two cement subsidiaries – Adani Cementation Ltd and Adani Cement Ltd – under Adani Enterprises Ltd. Adani Cementation Ltd was planning to set up two cement units at Dahej in Gujarat and Raigarh in Maharashtra. Adani group, the buyer of the two companies, has become the second-biggest player in the country after UltraTech Cement, which has a capacity of 120 million tonnes per year.
- The Adani group acquired 63.19 per cent of Ambuja Cements Ltd along with related assets.
- Ambuja’s local subsidiaries include ACC Ltd, which is also publicly traded.
- The Adani Family, through an offshore special purpose vehicle, announced that it had entered into definitive agreements for the acquisition of Switzerland-based Holcim Ltd’s entire stake in two of India’s leading cement companies – Ambuja Cements Ltd and ACC Ltd,” the Adani group said in a statement.
“The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is USD 10.5 billion, which makes this the largest-ever acquisition by Adani, and India’s largest-ever M&A transaction in the infrastructure and materials space,” the statement said.
Is UltraTech a good company?
Ultra Tech is a good company to work with. Job guarantee is good. Salary package is good.
Is Ultratech Cement a good company?
Ultratech cement is asias 2nd rank cement works. Ultratech cement provides best material cement is very good strength.
Why is India Cements falling?
Shares of India Cements Ltd fell 4.2% on the NSE in opening deals on Tuesday. This sharp fall comes after the company divested its entire stake in wholly-owned subsidiary Springway Mines Pvt Ltd to JSW Cement for a total cash consideration of ₹ 476.87 crore.
Exposure to non-core businesses and elevated debt have been pain points for investors in India Cements. Considering that, this move is a step in the right direction. Then, why are investors not excited? This is because this deal alone is unlikely to help India Cements see a meaningful de-leveraging. Analysts at Nuvama Institutional Equities note that more sales of such non-core assets, mainly the huge land bank, is key to driving a material de-leveraging.
“As per management commentary in the past, ICEM has a land-bank of around 27,000 acres across various locations in south India. Sale of these non-core assets is key to drive significant re-rating of the stock,” added the Nuvama report dated 11 October.
The report said that operationally, FY23 is turning out to be one of the most difficult years for India Cements, with Ebitda/tonne estimated to drop to a multi-year low of ₹ 300. Ebitda is short for earnings before interest, tax, depreciation and amortization. So, the brokerage house is of the view that a further sale of such non-core assets, mainly the huge land bank, is key to driving a material de-leveraging.
In a press release dated 10 October, the company said it has received cash of ₹ 373.87 crore and the balance ₹ 103 crore will be received before 31 December 2022. Investors would remember that India Cements stock saw a sharp run-up recently, in spite of its poor fundamentals.
- Expectations of consolidation in the cement sector has led to an upside in the stock (up 42% after 1Q results) despite significant pressure on earnings,” said analysts at Motilal Oswal Financial Services.
- The report added that the company’s valuations at 15.8 times FY24E EV/Ebitda and 82 EV/tonne appear unattractive, given the absence of capacity addition plans and high net debt/Ebitda.
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Will cement prices decrease?
Cement prices under pressure, Mid-June dealer check Photo : iStock New Delhi: sectors Mid-June dealer check by witnessed a price decline trend. All-India average cement price was down 4% MoM in Mid-June 2022. Prices in the North were impacted due to lower demand whereas prices in the East were hit by rising competition.
| Region | Price Decline |
| North | -6.60% |
| East | -6.20% |
| Central | -4.40% |
| South | -1.80% |
| West | -0.90% |
| All India | -4.00% |
QoQ Price Trend
| Average Price (Per 50 kg bag) | South | East | North | West | Central India | All India |
| 4QFY22 | 350 | 303 | 335 | 352 | 313 | 331 |
| 1QFY23 | 352 | 327 | 374 | 375 | 355 | 357 |
| QoQ Change | 0.40% | 8% | 11.50% | 7% | 13% | 7.8 |
Demand a major concern Apart from other than seasonal factors such as lower labour availability, the harsh summer this year also impacted demand. Coming quarter will also be a concern as Monsoon witnesses less demand for Cement since Construction activities is on a halt during Monsoon.
Cost pressure sustains: Prices of pet coke and imported coal are up 30-55% QoQ, while diesel prices are up 7% QoQ in 1QFY23 so far. Despite cost pressures sustaining, cement prices have corrected in the last one month – this would impact the profitability of cement companies. Going forward: Cost pressures to sustain for another two quarters at least, until 2QFY23.
Sharp stock-price corrections in recent times partly factor in this concern; however, the sector can see some more correction in the near term, as we enter a lean season (i.e. the monsoons: Jun-Sep) Subscribe to Notifications : Cement prices under pressure, Mid-June dealer check
Is UltraTech owned by L&T?
L&T to sell UltraTech Cement stake Mumbai: India’s largest engineering conglomerate by market value, Larsen and Toubro Ltd (L&T), will sell its 11.49% stake in UltraTech Cement Ltd, an Aditya Birla Group company, to a group of investors, a person familiar with the development said.
- The sale, through so-called off-market deals before the stock market opens on Thursday, can fetch as much as Rs1,000 crore, said the person.
- The UltraTech stock rose 4.66% to close at Rs763.15 on the Bombay Stock Exchange on Wednesday even as the exchange’s benchmark Sensex index gained 2.25% to close at 15,466.81 as investors rushed to buy stocks.
The L&T stock rose 3.8% to close at Rs1,633.65 At this price, the value of L&T’s stake at UltraTech is Rs1,091.56 crore. According to the person mentioned in the first instance, the shares will be sold at a discount. Normally, shares are sold at a discount when they are sold in bulk.
Selling pressure depresses the prices of a stock. L&T may offer the shares at Rs720-735. At the time of going to press, the book runner got bids for 12 million shares out of 14.3 million on sale. Grasim Industries Ltd, the flagship cement firm of the Aditya Birla Group, along with associates, owns 54.78% in UltraTech and has the right of first refusal to acquire L&T’s stake.
The latest development indicates that L&T has obtained the go-ahead from Grasim to sell the stake to other buyers. Two investment bankers in the know independently confirmed this to Mint. L&T has appointed Citigroup to be the main book runner for the deal.
“A slew of trades are expected to be transacted tonight and before the market opens to minimize the impact on the UltraTech share price,” one investment banker said. An L&T spokesperson confirmed the move. L&T has to exit its stake in UltraTech—formerly L&T UltraTech Cement Ltd—by December, according to a 2005 agreement.
The same agreement confers the right of first refusal to Grasim. “The right of refusal is not more than 60 minutes after L&T gives us the offer and selling price,” said D.D. Rathi, Grasim’s whole-time director and chief financial officer. Going by the agreement, if Grasim refuses to buy the shares, L&T can sell its stake in tranches to a scattered group of investors, and each potential investor is allowed to own less than 1% of the UltraTech stake.
- The company is barred from selling stake to rival cement makers.
- In 2001, Grasim acquired a 10.45% stake in L&T from Reliance Industries Ltd, in a negotiated stock market transaction.
- Later, the company made an open offer for an additional 20% stake after its stake rose beyond 14.9%, the mandated trigger to make such an offer under the acquisition guidelines of Indian capital market regulator.
The firms slugged it out between 2001 and 2005 before L&T spun off its 16 million tonnes per annum cement business into L&T UltraTech before selling a majority stake to Grasim, a deal that was expected to end the threat of a hostile takeover of the engineering firm.
Which is better Ambuja or UltraTech?
UltraTech Cement is cheaper than Ambuja Cement, making it a better option for a takeover in the near term.
Is Tata Steel is debt free?
A Look At Tata Steel’s Liabilities – The latest balance sheet data shows that Tata Steel had liabilities of ₹905.9b due within a year, and liabilities of ₹777.6b falling due after that. On the other hand, it had cash of ₹241.3b and ₹123.4b worth of receivables due within a year.
So it has liabilities totalling ₹1.32t more than its cash and near-term receivables, combined. When you consider that this deficiency exceeds the company’s huge ₹1.05t market capitalization, you might well be inclined to review the balance sheet intently. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution.
In order to size up a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover).
- Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
- Tata Steel’s net debt is only 0.70 times its EBITDA.
- And its EBIT easily covers its interest expense, being 10.8 times the size.
- So you could argue it is no more threatened by its debt than an elephant is by a mouse.
Better yet, Tata Steel grew its EBIT by 186% last year, which is an impressive improvement. If maintained that growth will make the debt even more manageable in the years ahead. The balance sheet is clearly the area to focus on when you are analysing debt.
- But it is future earnings, more than anything, that will determine Tata Steel’s ability to maintain a healthy balance sheet going forward.
- So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
- Finally, a company can only pay off debt with cold hard cash, not accounting profits.
So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. During the last three years, Tata Steel generated free cash flow amounting to a very robust 97% of its EBIT, more than we’d expect. That puts it in a very strong position to pay down debt.
What is the turnover of UltraTech?
PAT
| Yearly – UltraTech Cement Ltd. | ||
|---|---|---|
| Rs (in Crores) | ||
| Net Sales Turnover | 50663.49 | 40649.17 |
| Other Income | 611.80 | 726.58 |
| Total Income | 51275.29 | 41375.75 |
Is ITC a zero debt company?
ITC – The tobacco-to-paper giant has managed to remain debt-free despite its investment in hotels. Founded in 1910, ITC is India’s largest cigarette manufacturer but has since diversified into paper, packaging, hotels, and agri-business.
Why is India Cements falling?
Shares of India Cements Ltd fell 4.2% on the NSE in opening deals on Tuesday. This sharp fall comes after the company divested its entire stake in wholly-owned subsidiary Springway Mines Pvt Ltd to JSW Cement for a total cash consideration of ₹ 476.87 crore.
Exposure to non-core businesses and elevated debt have been pain points for investors in India Cements. Considering that, this move is a step in the right direction. Then, why are investors not excited? This is because this deal alone is unlikely to help India Cements see a meaningful de-leveraging. Analysts at Nuvama Institutional Equities note that more sales of such non-core assets, mainly the huge land bank, is key to driving a material de-leveraging.
“As per management commentary in the past, ICEM has a land-bank of around 27,000 acres across various locations in south India. Sale of these non-core assets is key to drive significant re-rating of the stock,” added the Nuvama report dated 11 October.
- The report said that operationally, FY23 is turning out to be one of the most difficult years for India Cements, with Ebitda/tonne estimated to drop to a multi-year low of ₹ 300.
- Ebitda is short for earnings before interest, tax, depreciation and amortization.
- So, the brokerage house is of the view that a further sale of such non-core assets, mainly the huge land bank, is key to driving a material de-leveraging.
In a press release dated 10 October, the company said it has received cash of ₹ 373.87 crore and the balance ₹ 103 crore will be received before 31 December 2022. Investors would remember that India Cements stock saw a sharp run-up recently, in spite of its poor fundamentals.
“Expectations of consolidation in the cement sector has led to an upside in the stock (up 42% after 1Q results) despite significant pressure on earnings,” said analysts at Motilal Oswal Financial Services. The report added that the company’s valuations at 15.8 times FY24E EV/Ebitda and 82 EV/tonne appear unattractive, given the absence of capacity addition plans and high net debt/Ebitda.
Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach. Take the test Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Why is Tatasteel down?
Here are a few reasons behind the fall in share price: A slowing global economy due to the Russia-Ukraine war & the inflation in the US soaring to 41-year high led to an abrupt end to the great commodity bull cycle seen in steel & the other base metals.
The rising inflation due to the war is another cause of worry for the market. The global markets have been under pressure since the war started. This fall in global markets due to war has also triggered a fall in the Indian IT markets.
