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UltraTech Cement’s share price could rise
The country’s largest cement producer, UltraTech Cement Ltd., saw its share price rise by 29% last year. Despite being near a 52-week high, experts believe there is still room for the stock to grow. Every cement producer in the country, including UltraTech, is benefiting from the strong demand for cement in the market. With the ongoing expansion of the company’s capacity, UltraTech has maintained its market share gains. Meanwhile, UltraTech sees improved earnings potential as a result of falling raw material prices. Several experts are predicting more growth for the stock based on the positive outlook for the future.
Analysts at Motilal Oswal Financial Services forecast UltraTech to rise more than 15% from current levels of around ₹8,736 to ₹10,1000. According to MOFSL, UltraTech is well positioned to meet the growing demand for cement. With an ambitious target to increase its domestic gray cement capacity to 182 Mtpa by FY27, UltraTech Cement is setting a new standard. Given the higher base, the company’s capacity CAGR (compound annual growth rate) of 9.5% during FY23-27 is considered encouraging. According to MOFSL experts, UltraTech Cement continues to lead the industry with these expansions. Government spending on infrastructure has fueled continued strong demand for cement, aided by increased activity in the real estate market. High demand for cement is in itself a lever to drive growth.
After COVID-19, cement demand remained strong, with a compound annual growth rate (CAGR) of 9% for FY21-2023. The improvement in demand, according to MOFSL analysts, was driven by strong demand from the urban housing and real estate sectors, low-cost housing programs and higher government spending on infrastructure development. According to MOFSL, demand momentum will continue to be strong, and they forecast a CAGR of 7-8% from FY23 to FY28, reaching 575 million tonnes (or 1.5 times the 390 million tonnes demand in FY23). The business is also focusing on improving and prioritizing its ESG goals.
Categories: Trends
Source: HIS Education