- Target
- ₹13,800
- At report
- ₹11,275+22% printed
- Vs our close
- +27.4%
Motilal Oswal reiterates BUY on UltraTech Cement after the Aditya Birla Group formally launched its cables and wires business 'Ultravolt' under UTCEM with an initial INR18bn investment, targeting the No. 2 industry position within five years. The broker keeps estimates unchanged pending more clarity on C&W revenue/margin guidance, maintaining its TP of INR13,800 based on 18x FY28E EV/EBITDA for the core cement business, and estimates the group could capture 5-7% C&W market share by FY31E.
- UTCEM launched its cables and wires business 'Ultravolt' with initial investment of INR18bn, commissioning a 1.1m km capacity plant at Bharuch, Gujarat, with commercial production from 1 Sep'26
- Ambition to become a top-two C&W player within five years, targeting 100k+ retailers and leveraging 5,000+ UBS outlets; initial rollout covers 500+ districts and 6,000+ pin codes
- Entry seen as strategically significant, akin to the group's successful Birla Opus paint venture which achieved double-digit market share within two years of launch
- Assuming a ~INR1.0 trillion C&W industry size growing at ~13% CAGR over five years, broker estimates UTCEM could achieve 5-7% market share by FY31E
- On the core cement business, demand remains healthy in 2Q despite a seasonally weak period, though muted prices and high opex/t could weigh on near-term margins
- Broker estimates consolidated revenue/EBITDA/PAT CAGR of ~12%/17%/19% over FY26-28, aided by ~10% volume CAGR and ~1.5pp OPM expansion to ~21% by FY28E; RoE/RoCE to improve to ~14%/~12% by FY28E from ~11%/~10% in FY26
- Near-term pressure on listed C&W peers' stock prices given UTCEM's aggressive market-share ambition
- Initial C&W operating profitability likely lower due to gradual capacity ramp-up and heavy brand-building/marketing spend
- Muted cement prices and high opex/t could weigh on cement segment margins in the near term
- Execution risk in scaling a new adjacency (C&W) to a targeted RoCE of ~25% only by FY31-32
- Ramp-up of C&W plant capacity from 1.1m km toward planned 3.5-4.0m km and additional LV/HV cable launches in the coming months/year
- Expansion of electrician engagement program (targeting 40k+ electricians trained over the next year) to drive C&W distribution
- Clarity on C&W revenue/margin guidance in coming quarters, which could prompt estimate revisions
- Continued market share gains in core cement business (30.9% in FY26, projected 31.6% by FY28E)
| Broker estimates | Unit | FY26 | FY27E | FY28E |
|---|---|---|---|---|
| Sales | ₹ b | 885 | 1,016 | 1,116 |
| EBITDA | ₹ b | 170 | 196 | 231 |
| Adj. PAT | ₹ b | 83 | 98 | 118 |
| EBITDA Margin | % | 19 | 19 | 21 |
| Adj. EPS | ₹ | 281 | 332 | 401 |
| EPS Growth | % | 35 | 18 | 21 |
| BV/Share | ₹ | 2,600 | 2,692 | 2,942 |
| RoE | % | 11.2 | 12.5 | 14.2 |
| RoCE | % | 10.1 | 11.1 | 12.3 |
| P/E | x | 40 | 33.8 | 28 |
| EV/EBITDA | x | 19.8 | 17.3 | 14.4 |
| EV/ton | USD | 179 | 166 | 151 |
Valuation: 18x FY28E EV/EBITDA. Broker values UTCEM at 18x FY28E EV/EBITDA to arrive at TP of INR13,800; estimates for the core cement business were left unchanged in this note pending more clarity on C&W revenue/margin guidance. No change to earnings estimates in this note; the broker is awaiting further clarity on Ultravolt (C&W) revenue and margin guidance before revising forecasts.
Extraction note: This is a thematic company update on UTCEM's new cables & wires venture, not a quarterly results note, so no 'quarter' highlights section applies. Summary-box financials are in INR billion (₹ b); the detailed income statement/balance sheet tables later in the report are in INR mi…