Ultratech Cement
Ultratech Company is the biggest cement player in the country. In fact, Ultratech has 22 integrated manufacturing units, 27 grinding units, one Clinkerisation unit and 8 Bulk Packaging Terminals. In the white cement segment, UltraTech goes to market under the brand name of Birla White. The shares of Ultratech have fallen from levels of Rs 8269 to the current levels of Rs 6350. The company reported moderate set of numbers for the quarter under review with domestic grey cement volume unchanged YoY, white cement volume declined 5% YoY.
Revenue from operations improved by 9.5% year-on-year to Rs.157,673 million on a consolidated basis. The company reported volume growth in the Central and South region and reported volume decline in East and West regions (geographically). The company is witnessing demand from various infrastructure constructions such as highway construction, railways, metro rail, irrigation projects, airports and urban housing market. On an average, capacity utilization for the quarter was 90%. As infrastructure and construction development takes place the company is likely to benefit from the same, being the biggest player in the country.
Ultratech Cement: Buy with a price target of Rs 7600
Broking firm, Anand Rathi continues to remain positive on the company on back of its strong business model, high operating margins, improving balance sheet, growing retail market share, brand transition, optimization of acquired business and capacity expansion.
“We maintain our BUY rating on the stock, however with a lower target price of Rs.7600 per share due to slower demand growth, rise in interest rates, fuel and power costs,” the brokerage has said.
The company acquired a majority stake in a RAK White Cement, a market leader in the GCC region with 0.9 metric ton clinker and 0.6 metric ton of white cement capacity. The company has synergies with Birla White and will boost its market leadership. This additional capacity will help the company meet the growing demand in Indian markets as well. The company will now put the white cement capacity expansion plan in India on hold. Investors looking to buy the stock now, will need to pay a price of Rs 6350.
Buy the stock of Dalmia Bharat with a price target of Rs 1851
Broking firm Anand Rathi sees several reasons to buy the stock of Dalmia Bharat. The company’s operating performance was impacted by costs climbing considerably. Aiming at 48.5m-ton cement capacity by FY24, the company commenced its 2.9m-ton Murli cement capacity in Maharashtra. And further aims at a 25% proportion of green power by FY23. Despite the ongoing capex, the company became net debt-free (net debt/EBITDA: -0.6x on 31st Mar’ 22.)
“Huge price hikes during the quarter helped restore its revenue growth. Its Q4 revenue grew 7.3% y/y, but its EBITDA declined 11% y/y due to high petcoke prices. The divestment of a non-core asset, its net-debt-free position and a definitive capital-allocation policy would strengthen its balance sheet. The Murli plant was commissioned in Jan’22. We retain a Buy, with a lower target of Rs.1,851 (earlier Rs. 2,411),” Anand Rathi has said.
Max Financial Services: Buy with a price target of Rs 950
Max Financial Services owns and actively manages a majority stake in Max Life Insurance Company Limited, making it India’s first listed company focused exclusively on life insurance. Max Life is a joint venture with Mitsui Sumitomo Insurance.
Max Financial Services posted a sharp growth in VNB even as APE dipped 4% YoY. Within segments, Protection/Non-PAR grew strongly while ULIP/PAR declined. As a result, Protection mix increased in 4QFY22. On the distribution front, both bancassurance and proprietary channels witnessed pressure.
“VNB margin improved to 31.9% in 4QFY22 (from 24.9% in 3QFY22), driven by an improved pricing and higher mix of Protection/Non-PAR business with management guiding for margin to remain in 25-26% range. We expect VNB margin to sustain at 26-27% and estimate 20% APE CAGR over FY22-24. This would imply a 19% VNB CAGR during FY22-24E. Maintain buy on the stock with a target price of Rs 950 (based on 2.5x FY24E EV and a holding company discount of 20%),” the brokerage has said. The shares of Max Financial Services were last seen trading at Rs 729 on the National Stock Exchange. The stock is good to buy now if you are a long term investor.