Cement Prices Drop: HSBC Lowers UltraTech, Dalmia Bharat Targets

HSBC an international brokerage firm noted a decrease in cement prices in different regions of India this quarter. South, North and West India markets have all experienced this decline resulting in reduced spreads and indicating a substantial decrease in unitary EBITDA by around 10-12%. In response to weakening prices, HSBC has decided to adjust its estimates and targets for cement companies. While maintaining a buy call on UltraTech Cement, it has revised the price target to approximately ₹10,900 per share. Similarly, HSBC has reduced the target price for Dalmia Bharat to ₹2,500 per share despite retaining its buy recommendation for the company.

UltraTech Cement Recent Developments

On 20 March, Competition Commission of India greenlights UltraTech Cement's acquisition plan for Kesoram Cement business from Kesoram Industries. This move follows a composite scheme of arrangement initiated on 30 November 2023 aiming at the acquisition of Kesoram Industries Limited's grey cement business by UltraTech Cement Ltd.

Despite the challenging market conditions, UltraTech Cement reported a 67% increase in net profit during the third quarter of FY24. This surge in profit reaching ₹1,774.78 crore for the three months ended December from ₹1,062.58 cr a year ago surpasses analyst's expectations. Lower operating costs and robust demand for building materials have been attributed to this impressive performance.

Analysts had anticipated UltraTech Cement to report a net profit of ₹1,714.19 crore for the October to December quarter according to estimates from seven brokerages. However, the actual net profit surpassed these projections demonstrating the company's resilience amid challenging market conditions.

Stock Performance of UltraTech & Dalmia Bharat Cement

At the time of writing UltraTech Cement shares are trading 0.58% higher than yesterday's closing price. The stock opened lower in early morning trade and hit a low of ₹9,580.00 and quickly recovered at 11:54 AM stocks are trading at ₹9,665.55. Over the past month, the stock faced a decline of 2.97%. In the last six months, UltraTech Cement's stock has risen by 18.05%. However, since the beginning of the year it has faced a decrease of 7.63%. Over the past year, the stock has shown growth of 30.67% and over the past five years it has seen a surge of 145.96%.

At 12.05 pm, Dalmia Bharat Cement shares are trading slightly higher by 0.02% compared to yesterday's closing price. However, over the past month the stock has declined by 8.63% and over the past six months it has seen a decrease of 14.26%. Looking at a longer timeframe Dalmia Bharat stock has gone up by 4.68% over the past year and increased by 89.51% over the past five years.