Target: ₹13,625
CMP: ₹11,497.15
We upgrade Ultratech Cement to Buy as we expect cement pricing to improve from Jan’26 led by strengthening demand and impending pressure on industry margins due to current weak prices and elevated pet coke prices. The stock has also corrected about 11 per cent from Aug’25 on account of muted demand amid monsoon and GST rationalisation limiting price hikes.
Cement demand momentum has improved in H2FY26, aided by rural housing, commercial and urban housing demand. While several infrastructure projects have been announced, activities have been muted post monsoon. Capex on roads has been growing from Sep’25 as per recent GoI spending data.
We expect demand to improve across regions as GoI spending on infrastructure improves over next few months. Key regions such as South and East where stable governments have been formed recently are expected to drive this growth; while demand from North, Central and West would remain stable. This would reduce the gap between non-trade and trade prices, which has increased in recent months.
Trade prices have been largely stable. While weak rupee and higher pet coke prices are expected to impact industry margins, UltraTech Cement would benefit from higher coal share, logistics optimisation aided by expanded manufacturing footprint, and synergy benefits of integration of acquired capacities.