Ultratech Cement closes 4% higher after CLSA upgrades shares to buy

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Published: October 23, 2017 5:06:19 PM

Ultratech Cement shares rose by more than 4% to close at Rs 4,200, after research and brokerage firm CLSA upgraded the shares to buy.

Ultratech Cement shares closed at Rs 4,200 on Monday, up by more than 4.1% on NSE. (Image: Reuters)

Ultratech Cement shares rose by more than 4% to close at Rs 4,200, after research and brokerage firm CLSA upgraded the shares to buy. Today’s rise helped the shares to outperform the Sensex which has returned more than 23% in the year so far. Barring today’s performance, the stock had underperformed the market over the past one month till 19 October 2017, falling 4.12% compared with 0.03% decline in the Sensex. The scrip had underperformed the market in past one quarter, falling by more than 4% as against Sensex’s 1.13% rise. The scrip had also underperformed the market in past one year, rising 0.4% as against Sensex’s 15.14% rise.

UltraTech Cement reported a 28.3% drop in standalone net profit to Rs 431.2 crore in the quarter ended September from a year earlier, hurt by higher interest outgo and fuel and freight expenses. Revenue increased by more than 6% from the year-ago period to Rs 6,571.3 crore. Notably, the company beat consensus analyst estimates on both topline and bottomline.

CLSA said that the results appeared to be good overall and there was no “shock” seen in the newly acquired JP Associates units. The company completed the acquisition of Jaiprakash Associates’ 21.2 million tonnes per annum (mtpa) cement capacity in the first quarter of financial year 2017-18. “This acquisition will enhance the company’s footprint into high growth markets of India viz., central India, Himachal Pradesh, eastern Uttar Pradesh and coastal Andhra Pradesh, where the company has been focusing to increase its presence,” UltraTech said in a statement.

CLSA has a target price of Rs 4,900 on the shares, implying an upside of more than 16% from the current market prices. The research and brokerage firm observed that the company’s management is betting on a demand revival, on the back of government initiatives.

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