UltraTech Cement Limited, a company under the Aditya Birla Group, is gaining immense popularity in India’s cement industry. It’s leading the market with its rapid growth, making it the largest manufacturer of grey cement and ready mix concrete (RMC) in India.
Not only that, it’s also one of the major producers of white cement in the country. Internationally, UltraTech holds the impressive title of being the third-largest cement producer in the world, excluding China.
Today, we’ll dive into the market performance of UltraTech Cement and determine if it’s a worthwhile investment or not!
Market performance of Ultratech Cement
UltraTech Cement’s market performance reflects its robust presence in the industry. With sales reaching INR 709,081.4 millionand revenue hitting INR 715,250.9 million, the company showcases strong fundamentals.
As of May 10, 2024, UltraTech Cement’s share price was around INR 9440+ per share. Over the past year, the stock has seen a fluctuation between a 52-week high of ₹10522.65 and a low of ₹7511.05.
Investors can also closely monitor UltraTech Cement’s share price chart for detailed insights into the company’s market performance.
5 things to know before investing in Ultratech Cement
Here is what you need to know.
1. Streamlining Smaller Operations
In recent years, the Indian cement industry has seen a lot of mergers. This means big companies like UltraTech have been buying up other cement companies like Binani Cement, Century Cement, and Jaiprakash Associates’ cement business. They do this to make their production better and become more powerful in the market.
But sometimes, when one company buys a lot of others, people worry that it might stop other companies from competing. They say it’s like forming a group, which could make it hard for new companies to join the market.
2. Growth Potential
Good news is coming for India’s residential housing market, as signs of recovery post-COVID are becoming evident. UltraTech Cement, one of the major players in the industry, has recently reported an 11% year-on-year growth in domestic sales. This indicates that more people are buying cement for building homes.
Moreover, with the government’s emphasis on promoting affordable housing and infrastructure development projects, the demand for cement is expected to continue rising. This suggests that companies like UltraTech may see sustained growth in the foreseeable future.
3. Balancing Local Demand-Supply
Cement prices and how it’s distributed can change a lot depending on where you are. This is because it costs a lot to transport cement to different places. UltraTech Cement is big and has a strong presence in many parts of India like the North, East, West, and Central regions.
Being spread out in so many places helps UltraTech because it can adjust to changes in demand and supply in different regions. This means they can keep their prices competitive.
4. Reducing Debt
Cement production requires substantial capital investment, often leading to high debt levels for companies. However, UltraTech Cement has actively reduced its debt from Rs. 3,901 crore in FY22 to Rs. 2,702 crore as of FY23. It also aims to achieve a ‘debt-free’ status upon completion of its expansion program.
UltraTech has more equity than debt by 2024. This means UltraTech is on track to strengthen its financial position, which is good news for investors and the company alike.
5. Rising prices of raw materials
Rising prices of raw materials such as coal and pet coke present several challenges. UltraTech Cement faced energy costs of ₹1555 per metric tonne in FY24. Moreover, raw material costs per tonne were ₹634, marking a 4% increase during the same period.
Conclusion
UltraTech Cement’s remarkable performance in India, evident through its market leadership, promising demand outlook, and strategic initiatives, positions it as a compelling investment opportunity. Considering its strong market presence investing in UltraTech Cement appears favorable for long-term investors seeking exposure to the cement industry. To invest in the stock market, open an account with Dhan.
