UltraTech Cement shares slip post Q4 result; should you buy?

Shares of UltraTech Cement declined over 1% in Monday’s morning trade after the company on Friday reported a 45.2% fall in consolidated net profit to Rs 1,774.13 crore for the fourth quarter ended March 2021 on account of reversal of deferred tax liabilities. The leading cement producer had posted a profit of Rs 3,236.85 crore in the January-March quarter a year ago.

The scrip traded 1.46% lower at Rs 6390.20 at around 10.50 am (IST). On the other hand, the benchmark BSE Sensex was up 357 points, or 0.73%, at 49,563 at around the same time.

However, revenue from operations of the Aditya Birla Group firm UltraTech Cement rose 32.72% to Rs 14,405.61 crore as against Rs 10,854.48 crore in the corresponding period of the last fiscal. According to UltraTech, the net profit for the quarter was lower because of the reversal of deferred tax liabilities.

Over the outlook, the company said while rural and semi-urban housing continues to drive growth, pick-up in government-led infrastructure aided incremental cement demand. Pent-up urban demand is also expected to improve.

Brokerage view

Motilal Oswal Financial Services retained a ‘Buy’ call on UltraTech Cement post Q4 result. “The company’s Q4FY21 result was impressive on multiple counts. While volume growth remained above industry, EBITDA/unit was strong at Rs 1,328 per tonne (over 18% YoY), driving 51% YoY growth in EBITDA,” the brokerage said. It has set a target price of Rs 8,050 for the cement major.

Global brokerage firm CLSA also has a ‘Buy’ call on UltraTech Cement with a price target of Rs 7,500. “UltraTech reported strong Q4 EBITDA of Rs 3700 crore on higher volume and better profitability. Almost all segments and regions reported strong demand.”

Bonanza to shareholders

Meanwhile, the company also recommended a dividend of Rs 37 per equity share of Rs 10 each for the year ended March 31.