Motilal Oswal has reiterated a BUY rating for UltraTech Cement, with a target price of INR 13,000, down from the previous INR 13,600.

The company's EBITDA for Q2 FY25 fell approximately 21% year-on-year to INR 20.2 billion, missing estimates by 7%. The decline in EBITDA per ton was around 24% year-on-year, with operating profit margins contracting by 3 percentage points to about 13%.

The management mentioned a pre-election slowdown and adverse weather conditions as factors contributing to demand weakness in the first half of FY25. However, they anticipate a recovery driven by pent-up demand and favorable monsoon conditions, projecting double-digit volume growth in the second half of the fiscal year.

Cement prices have increased by about 2% since August 2024 and have remained stable month-to-date. UltraTech has expanded its grinding capacity by 9 million tons per annum in the first half of FY25, with an additional 8 million tons expected to be commissioned in the second half.

The firm estimates a compound annual growth rate of 16% in consolidated EBITDA and 18% in adjusted PAT from FY24 to FY27, expecting to gain market share through robust capacity expansion strategies.