UltraTech Cement crosses ₹3 lakh crore in m-cap as shares touch new record high

UltraTech Cement, a flagship entity of the Aditya Birla Group, marked a significant achievement by crossing ₹3 lakh crore in market capitalisation during today's trading session. According to the latest BSE data, there are currently 22 stocks with a market capitalisation exceeding ₹3 lakh crore.

The company is the third-largest cement producer in the world, outside of China, with a total grey cement capacity of 137.85 MTPA. Demonstrating robust performance, the stock has surged by 16% this month, delivering its best monthly performance since July 2022.

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After breaking the ₹10,000 mark for the first time on December 13, the stock has continued to trade above this level, reaching a new historic high of ₹10,470 apiece with a gain of 4.51% in today's session. As per the latest exchange data, only 20 stocks are currently trading above the ₹10,000 mark on the Indian stock exchanges.

Meanwhile, today's upward momentum was driven by an upgrade from the Japanese brokerage firm Nomura, which revised its rating on the stock from 'neutral' to 'buy' and raised the target price to ₹11,500 apiece. The brokerage pointed out that India's cement industry showed robust volume growth of 17% YoY in the first half of FY24.

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Nomura expects the momentum to persist in the second half, projecting an 11% increase in sales volumes from the first half and a 13% YoY surge. Analysts have been positive on cement stocks amid increased government spending on infrastructure development, affordable housing initiatives, and strong demand for urban housing and real estate.

Additionally, favourable factors such as a decline in raw material costs, lower-than-expected rainfall, and strategic price hikes have contributed to cement companies, including UltraTech, delivering strong financial performance for the quarter ending in September.

In late November, Kesoram announced through a regulatory filing that its board had approved the demerger of its cement business under a scheme of arrangement. In the deal, shareholders will receive one share of UltraTech Cement for every 52 Kesoram shares of ₹10 each.

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This deal will provide UltraTech with the opportunity to extend its footprint in the highly fragmented, competitive, and fast-growing western and southern markets in the country.

It will help enhance UltraTech’s geographic reach in southern markets such as Telangana, where UltraTech currently does not have any cement manufacturing plant, according to analysts.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.