UltraTech Cement, a flagship entity of the Aditya Birla Group, has achieved a significant milestone by crossing ₹3 lakh crore in market capitalization. The company’s shares have been performing exceptionally well, with the stock surging by 16% in the past month, delivering its best monthly performance since July 2022. The company’s shares have also crossed the ₹10,000 mark for the first time, reaching a new all-time high of ₹10,470 apiece.
Several factors have contributed to UltraTech Cement’s strong financial performance and market capitalization. The cement industry in India has witnessed robust volume growth, with a 17% year-on-year increase in the first half of FY24. Increased government spending on infrastructure development, affordable housing initiatives, and strong demand for urban housing and real estate have also played a significant role. Additionally, factors such as a decline in raw material costs, lower-than-expected rainfall, and strategic price hikes have contributed to the company’s success.
UltraTech Cement is set to acquire the cement business of Kesoram Industries, a flagship company of the BK Birla Group, in an all-share deal valued at approximately ₹7,600 crore, including debt. This acquisition will provide UltraTech with the opportunity to expand its footprint in the highly fragmented, competitive, and fast-growing western and southern markets in India. It will also enhance the company’s geographic reach in southern markets such as Telangana, where UltraTech currently does not have any cement manufacturing plant.
Analysts remain positive about UltraTech Cement’s future prospects. The company’s impressive financial achievement has strengthened the belief in its potential to maintain its growth momentum in the foreseeable future. Analysts anticipate robust growth for UltraTech Cement, fueled by heightened demand, enhanced realisation, expanding market share, and strategic cost optimization measures. They foresee a compound annual growth rate (CAGR) of 12% in revenue, 21% in EBITDA, and 30% in adjusted profit after tax (APAT) over the period from FY23 to FY26E.
RTM Watch’s Take
UltraTech Cement’s crossing of the ₹3 lakh crore market capitalization milestone is a testament to the company’s strong position in the cement industry and its ability to capitalise on favourable market conditions. The company’s impressive stock performance, acquisition plans, and positive market outlook indicate a promising future for UltraTech Cement. As the cement industry continues to witness growth and government initiatives drive demand, UltraTech Cement is well-positioned to benefit from these trends.
