Despite the uneasy market environment, shares of Aditya Birla Group flagship UltraTech Cement were the top gainers on the Nifty 50 index, as brokerages and experts digested the updates shared in UltraTech Cement’s latest investor call.
In the investor call, the cement major shared the rationale and rationale behind its entry into the cable and wire (C&W) segment. The company aims to expand its consumer reach and has identified C&W as a strategic fit given its immediate proximity to the existing core construction value chain. Also, the company continues to consolidate its leading position in cement through both organic and inorganic expansion beyond FY27.
At 10.40 am, UltraTech Cement shares were up 2 per cent at Rs 10,336 per share on the NSE.
Domestic brokerage Nuvama Institutional Equities said, “UltraTech Cement in its investor call emphasised on a well thought out strategy of entering C&W, optimal utilisation of the C&W facility by FY31E, as well as industry-level operating margins by FY31E, which were initially low due to A&P and minimal working capital.” The brokerage maintained its buy call.
Moreover, Motilal Oswal also reiterated its buy rating on the stock, with a price target of Rs 13,700 per share.
UltraTech Cement is not planning any additional capex in C&W in the near future as it believes that the existing capacity will be adequate by FY31. At maturity (FY31), the company expects 5-7 times asset turn, with wire and cable mix of 60 per cent and 40 per cent, respectively.
The company hopes to leverage its relationship with contractors (being the leader in the cement market with a 28 per cent share) for new verticals. In addition, UBS (UltraTech Building Solutions) network, B2B relationships, exposure and reach to end-users and influencers will further expand its reach.