Prabhudas Lilladher has reiterated a BUY call on Ultratech Cement with a target price of Rs 13,835 per share, implying meaningful upside from the current market price of Rs 10,997. The brokerage’s conviction rests on Ultratech’s unmatched scale, disciplined capacity expansion, superior cost management and a resilient demand backdrop, which together underpin an expected FY26–28 volume and EBITDA CAGR of 11 percent and 17 percent, respectively. The stock currently trades at 16.8x and 14.6x EV/EBITDA on FY27E and FY28E, while the target is based on a premium 18x multiple to Mar 2028 consolidated EBITDA of Rs 231.5 billion, reflecting its status as the cost and market share leader in Indian cement. With rising infrastructure spending, steady housing demand, strong balance sheet metrics and improving profitability from recent acquisitions, Ultratech is positioned, in PL’s view, to outpace the sector and consolidate its leadership across regions.

BUY Call for Cement Major

Recommendation and valuation framework PL maintains its BUY rating on Ultratech Cement, assigning a target price of Rs 13,835, anchored on 18x EV/EBITDA applied to the Mar 2028 consolidated EBITDA estimate of Rs 231.5 billion. This yields an implied enterprise value of roughly Rs 4.17 trillion and equity value of about Rs 4.08 trillion post net debt of Rs 90.2 billion, translating into the target on a share base of 295 million.
Implied upside and trading multiples At a CMP of Rs 10,997, Ultratech trades at 16.8x FY27E and 14.6x FY28E EV/EBITDA, and 31.3x FY27E P/E, levels PL sees as justified by high-teens EBITDA growth, improving return ratios and best‑in‑class balance sheet quality. Return on equity is forecast to improve to 12.9 percent in FY27E and 12.7 percent in FY28E, while RoCE is seen stepping up from 12.8 percent in FY26 to 16.2 percent in FY28E as new capacities ramp up and integration synergies flow through.

Key trading levels for investors The report highlights a 52‑week range of Rs 10,325–13,110, with PL’s fundamental target of Rs 13,835 serving as the primary upside reference level for investors. On the downside, the lower end of the 52‑week band near Rs 10,300 emerges as a critical support zone, with valuation comfort deepening as EV/EBITDA approaches the mid‑teens on forward earnings.

Demand environment: resilient despite macro noise

Macro and sector growth pulse PL’s channel checks suggest industry cement demand is currently growing at roughly 6–7 percent year‑on‑year, even as heatwaves and localized labour shortages temporarily constrain execution at some sites. A delayed monsoon or El Niño‑driven pattern could in fact elongate the construction season, cushioning near‑term risks from global macro uncertainties.

Infrastructure and housing as structural anchors Government of India spending in April 2026 registered a robust 19 percent year‑on‑year rise, and 36 percent month‑on‑month, underlining policy commitment to infrastructure outlays that directly support cement offtake. Complementing this, housing activity and urbanization trends are sustaining demand in the West, South and East regions, while the North appears softer for now due to heatwave‑related labour constraints rather than structural weakness.

Cost discipline and operational efficiency

Fuel sourcing and input risk mitigation Ultratech remains relatively insulated from Middle East disruptions because it predominantly sources petcoke and coal from the US, limiting exposure to Red Sea logistics and regional geopolitical shocks. While coal prices have inched up, petcoke prices have moderated from recent peaks and availability remains adequate, while packaging (PP bag) cost inflation has eased from its highs though still above historical norms.

Efficiency initiatives driving per‑tonne gains The company continues to optimize its fuel mix via increased domestic coal usage in East and Central India, alongside higher renewable energy penetration, expansion of waste heat recovery systems, and consistent reduction in lead distances. Between FY24 and FY26, cumulative efficiency gains from WHRS, renewable power, clinker conversion, alternative fuels, logistics optimization and lower energy intensity have reached about Rs 185 per tonne. PL expects these levers to buttress Ultratech’s cost leadership, with blended EBITDA per tonne projected to rise from Rs 1,103 in FY26 to Rs 1,225 by FY28E, implying roughly 5 percent CAGR over FY26–28.

Scale, capacity growth and regional positioning

Capacity build‑out at double‑digit CAGR Ultratech’s grey cement capacity in India is projected to expand from 191.4 mtpa in FY26 to 237.1 mtpa by FY28E, representing an 11 percent CAGR and reinforcing its position as the country’s largest cement producer. This expansion is backed by strong operating cash flows, which are estimated at Rs 168–171 billion annually in FY27E–28E, comfortably funding planned capex of about Rs 100 billion per year without stressing the balance sheet.

Regional mix and profitability hierarchy The domestic footprint is well diversified, with capacity share of 26 percent in Central, 24 percent in West, 19 percent in North, 16 percent in South and 15 percent in East India. Profitability remains skewed toward the North as the most lucrative region, followed by West, South and East; Ultratech’s competitive position in the South has strengthened meaningfully through acquisitions and brownfield expansions, enhancing market share and margin resilience in that cluster.

Acquisition integration and portfolio engines

India Cements and Kesoram synergy path Integration of India Cements and Kesoram has been deliberately paced, with PL highlighting intensive engagement with dealers, transporters and channel partners before full brand migration to the Ultratech umbrella. This measured approach has yielded smooth acceptance across acquired markets, and management remains on course to lift India Cements’ EBITDA to about Rs 1,000 per tonne by end‑FY28 through operational and commercial efficiencies and selective land monetisation.

RMC, wires and cables for adjacency growth Ultratech’s Ready‑Mix Concrete business has scaled rapidly, with revenue rising from roughly Rs 20 billion in FY20 to over Rs 70 billion in FY26, and is expected to double again over the next three years, aided by 465 plants and an increasingly asset‑light deployment of mobile and project‑specific units. The upcoming wires and cables foray, targeted to commence operations by Q3 FY27, will lean on the existing UBS network and aims ultimately to reach around 100,000 retail counters, leveraging entrenched relationships with contractors, engineers, and building‑materials retailers to build a sizeable adjacencies platform over time.

Financial trajectory and key metrics

Earnings, cash flow and balance sheet Consolidated sales are forecast to climb from Rs 885.1 billion in FY26 to Rs 1,154.5 billion in FY28E, while EBITDA is expected to rise from Rs 170.2 billion to Rs 231.5 billion over the same period, lifting margins from 19.2 percent to 20.1 percent. Adjusted PAT is projected to grow from Rs 81.7 billion in FY26 to Rs 112.8 billion in FY28E, corresponding to EPS accretion from Rs 277.1 to Rs 382.7, even as net debt‑to‑equity trends down to roughly 0.1x on the back of robust free cash flow generation.

Return ratios and shareholder payout Free cash flow per share is estimated at Rs 197 in FY26, rising to Rs 242 in FY28E, allowing Ultratech to maintain a healthy dividend profile with DPS expected at Rs 90 and Rs 99 in FY27E and FY28E, respectively, while still funding capex. These dynamics support a steady improvement in capital efficiency, with ROCE forecast to move from 10.4 percent in FY25 to 16.2 percent in FY28E, underscoring the accretive nature of the growth capex and acquisitions.

Investment view, strategy and trading roadmap

Core investment thesis PL positions Ultratech as the sector’s preferred structural long, given its pan‑India scale, disciplined capacity addition through FY28E, proven ability to integrate acquisitions and demonstrated cost‑out credentials in fuel, logistics and energy. The brokerage believes the company is uniquely placed to capture the multi‑year upcycle in cement demand driven by infrastructure, housing and urbanization, while maintaining balance sheet strength and superior return ratios versus peers.

Suggested levels and risk markers Long‑term investors are advised to accumulate the stock on market‑wide corrections toward the Rs 10,300–10,500 band, where valuation support and franchise strength converge to create an attractive risk‑reward profile. The central reference point remains the fundamental target of Rs 13,835, with any sustained move beyond that level requiring either a further upward revision in medium‑term EBITDA estimates or a structurally higher valuation multiple should Ultratech materially out‑execute peers on growth and margins.