Buy Ultratech Cement; target of Rs 3300: Religare

Best-in-class EBITDA/t: With various cost efficiency initiatives in place (optimising fuel mix, reduction in lead distance), UTCEM maintains best-in-class EBITDA/t amongst large-cap peers. We expect EBITDA/t to expand by Rs 350/t over the next two years from Rs 890 in FY16, staying well ahead of ACC/ACEM’s Rs 500/Rs 660 print in CY15. UTCEM remains our top pick: We model for a revenue/earnings CAGR of 14%/35% over FY16-FY18, and maintain our Mar’17 TP of Rs 3,300 based on 13x one-year forward EV/EBITDA. In our view, UTCEM offers the best opportunity to play the cement sector in India and the stock can continue to outperform in the near term – maintain BUY.

UTCEM remains our top pick: We model for a revenue/earnings CAGR of 14%/35% over FY16-FY18, and maintain our Mar’17 TP of Rs 3,300 based on 13x one-year forward EV/EBITDA. In our view, UTCEM offers the best opportunity to play the cement sector in India and the stock can continue to outperform in the near term – maintain BUY.

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