interest, taxes, depreciation, and amortisation)- at a premium to peers (in line with the spread over the last year). Ultratech (under-load tap changer) is not exposed to the uncertainty associated with royalty payments as is the case with some other cement producers. At our target price, Ultratech would trade at 16.6x P/E (price-to-earnings ratio) and an EV/t of $134 (on 57mtpa of capacity, R/$ rate at 60) vs. replacement cost of $110/tonne.
Risks: A 1% change in cement realizations impacts profit after tax by 5%; 1% change in cement volumes would impact PAT by 2%. Upside risks that could sustain the shares above our target price include better production discipline, higher price hikes, stronger demand, or lower costs vs. expectations.