On Monday, JPMorgan initiated coverage on Ultra Tech Cement Ltd (UTCEM:IN) stock with an Overweight rating and set a price target of INR13,750.00. The firm's analysis indicates that despite a forecast of stable industry utilization, Ultra Tech Cement is expected to see financial gains due to cost savings and increased capacity.
These factors are projected to lead to a compound annual growth rate (CAGR) of approximately 18.8% in earnings before interest, taxes, depreciation, and amortization (EBITDA) and 23.5% in profit after tax (PAT) over the next three years, until the fiscal year 2027.
JPMorgan's projections slightly exceed the consensus, suggesting a robust growth trajectory for Ultra Tech Cement. The analyst pointed out that the company's valuations surpass most of its Indian cement industry peers, which is attributed to its superior returns profile.
Despite trading at a premium, with its price-to-earnings (P/E) ratio two standard deviations above its historical average, Ultra Tech Cement's valuations are considered close to average when compared to the NIFTY index.
The price target of INR13,750 is based on 21 times the rolling 12-month forecast EBITDA, implying a P/E multiple of around 38 times for the fiscal year 2026. JPMorgan's positive outlook is supported by expectations of continued capacity growth and potential near-term price increases for Ultra Tech Cement.
However, the financial institution also cautions that risks such as project delays or lower-than-anticipated benefits from cost-saving initiatives could negatively impact the company's performance. These factors are essential considerations for investors as they assess the future prospects of Ultra Tech Cement in the market.
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