UltraTech Cement Ltd., India’s largest cement producer, witnessed a 29% surge in its share price last year. The company is riding high on the robust demand for cement in the market, and despite hovering near its 52-week highs, market pundits believe there’s still room for the stock to grow. UltraTech’s ongoing capacity expansions, along with the steady drop in raw material prices, have helped the firm maintain its market share gains and bolstered its earnings potential.
Analysts at Motilal Oswal Financial Services (MOFSL) anticipate a further 15% increase in UltraTech’s share price, taking it from approximately ₹8736 to ₹10,1000. According to MOFSL, UltraTech is well-placed to cater to the burgeoning demand for cement in the market. The company’s ambitious plan to increase its domestic grey cement capacity to 182 million tonnes per annum (Mtpa) by FY27 demonstrates its forward-thinking approach. Given the larger base, UltraTech’s capacity compound annual growth rate (CAGR) of 9.5% over FY23–27 is seen as a positive sign by industry watchers. The firm’s expansions are viewed as setting new industry standards and helping it maintain its market leadership.
The strong demand for cement, driven by government infrastructure spending and a boost in real estate activities, is a key factor propelling growth. Post the COVID-19 pandemic, cement demand has remained strong, with a 9% CAGR for FY21–2023. As per MOFSL analysts, this surge in demand is attributable to robust demand from the urban housing and real estate sector, low-cost housing schemes, and increased government expenditure on infrastructure development.
MOFSL projects a continued strong demand momentum, forecasting a 7-8% CAGR from FY23 to FY28, amounting to 575 million tonnes (or 1.5 times the 390 million tonnes of demand in FY23). Concurrently, UltraTech is focusing on enhancing and prioritising its ESG (Environmental, Social, and Governance) goals, cementing its commitment to sustainable practices.
In light of these developments, it’s clear why UltraTech Cement’s share price is a topic of interest for many and why the company remains a focal point in the business world. With its ongoing capacity expansions and a favourable market outlook, UltraTech Cement Ltd. seems poised for continued growth and success in the coming years.
