ULTRACEMCO - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.6

🧱 Fundamental Analysis of UltraTech Cement (ULTRACEMCO)

✅ Strengths

Market Leadership

₹3.6 lakh Cr market cap — largest cement company in India

Strong brand, scale, and distribution advantage

Earnings Power

EPS: ₹235 — robust earnings base

PAT Qtr: ₹2,249 Cr vs ₹2,482 Cr — slight dip, but YoY growth of 43.8%

ROE: 9.34% — decent for a capital-intensive industry

Technical Support

Price above DMA 50 (₹12,025) and DMA 200 (₹11,470) — bullish trend

RSI: 49.8 — neutral zone, not overbought

MACD: +105 — positive momentum

Low Leverage

Debt-to-Equity: 0.34 — healthy for infrastructure-heavy sector

⚠️ Concerns

Valuation Stretch

P/E: 52.1 vs Industry PE: 51.1 — slightly overvalued

PEG Ratio: -10.1 — negative PEG suggests unreliable or unsustainable growth projections

Book Value: ₹2,399 vs Price: ₹12,221 — ~5x book, premium valuation

Low Dividend Yield: 0.63% — not attractive for income investors

Return Metrics Could Be Better

ROCE: 10.9% — acceptable, but not exceptional for long-term compounding

Flat Institutional Activity

FII & DII Hold ↑ 0.06% — marginal increase, not a strong signal

📉 Ideal Entry Price Zone

Entry Zone: ₹11,400–₹11,800

Near DMA 200 and below current price

Offers better margin of safety and valuation comfort

🧭 Long-Term Investment Outlook

UltraTech Cement is a moderate candidate for long-term investment. It offers stability, scale, and consistent earnings, but valuation is rich and return metrics are not elite. Suitable for investors seeking exposure to infrastructure and housing growth, but not ideal for aggressive compounding.

Holding Period: 2–4 years

Reassess if ROE crosses 12% and PEG turns positive

Monitor cement demand cycles and input cost pressures

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹12,600–₹12,700

Near 52-week high and psychological resistance

Full Exit

If ROE stagnates below 9% for 2+ quarters

If PEG ratio remains negative and earnings growth slows

If price breaks below ₹11,000 and fails to recover

Reinvest: On dips near ₹11,000–₹11,400 if fundamentals remain intact

Would you like a comparison with peers like Shree Cement or Ambuja Cements to evaluate better long-term plays in the cement sector?

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