Ultratech Cement shares underperform Nifty, down 25% YTD; should you buy, hold or sell?

Ultratech Cement share price has plunged in excess of 25 per cent so significantly this 12 months, underperforming even benchmark NSE Nifty 50 which has tanked 5 per cent. The inventory tumbled 6 for each cent on Friday, a day immediately after the firm introduced a Rs 12,900 crore capex prepare of incorporating 22.6 million tonnes for every annum (mtpa) capacity by FY25. According to analysts at Sharekhan, this would aid Ultratech Cement in protecting its management positioning in the sector. “We feel these intense ability additions by large gamers can place undue force on operational profitability specifically if cement demand does not resonate with the supply and vitality prices do not normalize to a greater extent,” they stated. Brokerages see up to 30% upside on the inventory heading forward.

Sharekhan: Acquire
Concentrate on price: Rs 7,100 Upside 25%

The brokerage maintains obtain contact on the stock with revised goal price of Rs 7,100, “We continue to be optimistic on the domestic cement demand from customers development in excess of a for a longer period period of time driven by anticipated healthy need from infrastructure, rural housing and urban housing. Even so, intense capability growth ideas of large players could get back again fired if cement desire does not grow in tandem with climbing provide,” it stated. As a result, there is a danger of possible downgrades in earnings estimates for the marketplace including for UltraTech going forward, analysts said. Taking into consideration the exact, they lowered their EV/EBITDA valuation various for Ultratech, which is currently buying and selling at 9.8x EV/EBITDA on FY24E earnings, beneath its long-term historical normal.

Motilal Oswal: Acquire
Concentrate on cost: Rs 7,825 Upside 30%

In accordance to analysts at Motilal Oswal, the enlargement will assist it achieve a domestic Gray Cement potential of 153.5mtpa by FY25. They anticipate cement shares to underperform in the close to-phrase, supplied the sustained enhance in power expenditures, the complete effects of which should really be felt in 1HFY23 the close to-expression weak point in demand from customers and the partial rollback of the rate hikes in May’22. “We have kept our estimates unchanged as of now however we assume UTCEM to flip web dollars beneficial in FY26 (from FY24 earlier) just after announcement of contemporary capex,” they claimed. The brokerage has a get get in touch with on the inventory with a target value of Rs 7,825 and reiterate Buy rating.

In the meantime, Santosh Meena, Head of Exploration, Swastika Investmart Ltd endorses traders to promote Ultratech Cement shares. “The counter is witnessing a descending triangle formation sample. In the last buying and selling session, the inventory has damaged neckline assist with solid volume. The stock is buying and selling under all its averages which is also a negative signal for the counter. On the downside, Rs 5,600 is the vital stage and down below this, we can hope a cost-free drop to Rs 5,000. On the upside, Rs 6,000 is an rapid prone region,” he mentioned.

(The inventory recommendations in this tale are by the respective study analysts and brokerage companies. Money Categorical On the net does not bear any obligation for their financial investment guidance. Funds markets investments are subject to guidelines and polices. Remember to seek the advice of your investment decision advisor before investing.)