Jefferies forecasts 18% upside in this Aditya Birla Group stock; calls it ‘India’s Global Cement Titan’ 

Jefferies expects volume growth at a compounded annual rate of 12% over FY25 to FY28, with operating earnings before interest, taxes, depreciation, and amortisation rising at a faster 23% pace during the same period. While pricing growth could remain modest due to industry focus on volumes, demand from rural housing and public infrastructure spending is expected to support earnings visibility.

Jefferies on UltraTech Cement: Largest cement producer outside China

Jefferies points to UltraTech Cement’s size as its biggest strength, noting that the company has built a lead that competitors are unlikely to close anytime soon. The brokerage notes that domestic capacity of around 200 million tonnes per annum stands nearly twice that of the nearest rival, which gives it both pricing flexibility and cost efficiency.

“UltraTech Cement has crossed 200MTPA capacity, becoming the largest cement producer outside China,” Jefferies says in its report.

The report adds that the company’s presence across the country, combined with a strong distribution network, allows it to operate at higher utilisation levels than the industry average. This translates into better margins and resilience during cyclical downturns. Jefferies data shows UltraTech consistently running ahead of industry averages across multiple years, reinforcing this operational edge.

Jefferies also notes that UltraTech Cement has steadily increased its market share, touching close to 30% by volume, which further strengthens its position in key regions. The firm believes this scale enables procurement efficiencies and logistics advantages that smaller peers struggle to match.

Jefferies on UltraTech Cement: Expansion pipeline and acquisitions fuel growth

The brokerage traces UltraTech Cement’s journey over four decades, describing it as a mix of disciplined acquisitions and steady internal expansion. The company took nearly 36 years to reach the first 100 million tonnes per annum, but doubled that capacity in less than a decade through a combination of deals and brownfield projects.

“Scale also supports efficiency-led capex that smaller peers can’t justify,” Jefferies says.

“The Aditya Birla Group entered cement in 1983, with the UltraTech Cement brand formed in 2004 after acquiring L&T Cement,” Jefferies adds.

The report highlights key acquisitions including Jaypee assets, Binani Cement and Century Cement, which helped push capacity beyond 100 million tonnes per annum. More recent additions, including Kesoram and India Cements assets, have further strengthened its footprint.

The capacity roadmap chart shows a steady climb to an estimated 240 million tonnes per annum by FY28, with both organic and acquired capacity contributing to growth.

Jefferies expects this expansion to translate into sustained volume growth, with rural housing demand remaining strong and urban demand showing signs of recovery. Government spending on roads and housing schemes is expected to remain a key demand driver.

“Government infra spend and push on housing for all scheme should support this growth,” Jefferies says.

Jefferies on UltraTech Cement: Earnings outlook supported by efficiency gains

Beyond volume growth, Jefferies expects UltraTech Cement to benefit from cost efficiencies and improving operating leverage. The brokerage estimates that unit earnings before interest, taxes, depreciation and amortisation could rise to Rs 1,245 per tonne by FY28 from Rs 925 per tonne in FY25.

This improvement is expected to be driven by better capacity utilisation, cost control measures and investments in renewable energy and waste heat recovery systems. Jefferies report show a steady rise in renewable power usage and waste heat recovery capacity, which could help lower energy costs over time.

The brokerage also notes that UltraTech Cement has maintained a comfortable balance sheet despite aggressive expansion, which gives it room to continue investing without stretching finances.

“Despite higher capacity growth in the past five and ten years, UltraTech’s net debt position has remained comfortable,” Jefferies adds.

At the same time, Jefferies expects pricing growth to remain moderate, as companies prioritise volumes in a competitive market. Even so, operating profit is expected to grow faster than revenue due to efficiency gains.

Jefferies on UltraTech Cement: Building solutions add another layer of growth

While cement remains the core business, Jefferies sees value in UltraTech Cement’s gradual push into adjacent segments. The company has expanded into ready mix concrete, white cement and a broader building solutions portfolio that includes products such as pipes, sanitaryware and electricals.

“UltraTech Cement’s capital allocation remains disciplined and cement led, while selectively building adjacencies,” Jefferies adds.

The report notes that the company operates over 425 ready mix concrete plants across 163 cities and has more than 5,300 building solutions outlets. This network allows it to cross sell products and deepen its presence in construction value chains.

Jefferies also points to the company’s entry into wires and cables with an investment of Rs1,800 crore as a step that could expand its reach beyond cement over time.

“As free cash flows build, UltraTech Cement is likely to deepen its building solutions portfolio while continuing to extend its leadership in cement,” the report says.

Conclusion

Jefferies’ view on UltraTech Cement rests on a mix of scale, execution and demand visibility. The brokerage sees the company maintaining its lead in a consolidating industry, backed by a strong pipeline of capacity additions and steady demand from infrastructure and housing. While valuations remain higher than some global peers, Jefferies believes the company’s operating performance, balance sheet strength and growth prospects justify the premium. With an 18% upside to its target price of Rs 14,025, UltraTech Cement remains a preferred pick in the sector based on the brokerage’s latest assessment.

Disclaimer: Investment analysis and target prices mentioned are based on reports by Jefferies and are for informational purposes only. This content does not constitute a direct offer, solicitation, or a specific recommendation to buy, sell, or hold the security. As market conditions and company valuations are subject to change, readers are advised to consult with a SEBI-registered investment advisor before making any financial decisions.

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