Buy UltraTech Cement, target of 
1,033: Motilal Oswal
Bangalore: With the expectation of improvement in Ultra Tech assets' earning power, Motilal Oswal has recommended buy rating with a price target of 
1,033.
In its report, Motilal Oswal stated that UltraTech Cement's Q2 (second quarter) of (financial year 2010) FY10 results are below our estimates with EBITDA (earnings before interest, taxes, depreciation and amortization) margins of 30.5 percent v/s estimate of 34.6 percent and PAT (profit after tax) of 2.5 billion v/s estimate of 3.24 billion. With the commissioning of new capacity, Ultra Tech assets' earning power is expected to improve considerably. This, coupled with the consolidation of cement assets into UltraTech, would act as a re-rating catalyst, narrowing the valuation discount against its peers. While the stock's short-term performance would be influenced by the swap ratio with Samruddhi Cement, the consolidated entity would command par valuations, if not a premium to its peers due to size, superior earnings power and the management's execution capabilities.
UltraTech Cement is an India-based company engaged in the production of cement. The company has an annual capacity of 18.2 million tons. It manufactures and markets ordinary Portland cement, Portland blast furnace slag cement and Portland Pozzalana cement. It also manufactures ready mix concrete (RMC). It has five integrated plants, six grinding units and three terminals, two in India and one in Sri Lanka. The company is also an exporter of cement clinker. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. The company's subsidiaries include Dakshin Cements and UltraTech Ceylinco. If the stock is bought at Thursday's closing price of 776, the percentage of loss would be 33 percent.
1,033.
In its report, Motilal Oswal stated that UltraTech Cement's Q2 (second quarter) of (financial year 2010) FY10 results are below our estimates with EBITDA (earnings before interest, taxes, depreciation and amortization) margins of 30.5 percent v/s estimate of 34.6 percent and PAT (profit after tax) of 2.5 billion v/s estimate of 3.24 billion. With the commissioning of new capacity, Ultra Tech assets' earning power is expected to improve considerably. This, coupled with the consolidation of cement assets into UltraTech, would act as a re-rating catalyst, narrowing the valuation discount against its peers. While the stock's short-term performance would be influenced by the swap ratio with Samruddhi Cement, the consolidated entity would command par valuations, if not a premium to its peers due to size, superior earnings power and the management's execution capabilities.
UltraTech Cement is an India-based company engaged in the production of cement. The company has an annual capacity of 18.2 million tons. It manufactures and markets ordinary Portland cement, Portland blast furnace slag cement and Portland Pozzalana cement. It also manufactures ready mix concrete (RMC). It has five integrated plants, six grinding units and three terminals, two in India and one in Sri Lanka. The company is also an exporter of cement clinker. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. The company's subsidiaries include Dakshin Cements and UltraTech Ceylinco. If the stock is bought at Thursday's closing price of 776, the percentage of loss would be 33 percent.