Ultratech Cement Upgraded to 'BUY'

Ultratech Cement, a leading player in the cement industry, has been upgraded to 'BUY' due to expectations of improving cement pricing from January 2026. This is driven by strengthening demand and impending pressure on industry margins due to current weak prices and elevated pet coke prices.

Improved Demand Momentum

Cement demand momentum has improved in the second half of FY26, aided by rural housing, commercial, and urban housing demand. Although several infrastructure projects have been announced, activities have been muted post-monsoon. However, capex on roads has been growing from September 2025, as per recent government spending data.

Regional Demand Growth

Key regions such as South and East, where stable governments have been formed recently, are expected to drive this growth. Demand from North, Central, and West would remain stable, reducing the gap between non-trade and trade prices, which has increased in recent months.

Company Outlook

Ultratech Cement is expected to benefit from higher coal share, logistics optimization aided by an expanded manufacturing footprint, and synergy benefits of integration of acquired capacities. The company's volumes are expected to clock ~12% CAGR over FY25-28E on the back of superior execution and ramp-up of recent inorganic expansion.

Financial Projections

The company's EBITDA is expected to deliver a strong 24% CAGR over FY25-28E. The stock is trading at an EV of 16.4x/14.1x FY27E/28E EBITDA. The revised target price is Rs13,625, valuing at 18x EV of Sep'27E EBITDA.

Conclusion

With improving demand momentum, regional growth, and a strong company outlook, Ultratech Cement is a promising investment opportunity. However, remember to do your own research and consult with certified experts before making any investment decisions.