UltraTech Cement, the flagship company of the Aditya Birla Group, achieved a major milestone on Wednesday by crossing ₹3 lakh crore in market capitalization during trading on the Bombay Stock Exchange (BSE).
UltraTech Becomes 3rd Company With Over ₹3 Lakh Crore M-Cap
With this feat, UltraTech Cement has joined an elite club of only 22 companies on the BSE that boast a market cap of over ₹3 lakh crore.
Reliance Industries and TCS are the only other companies above the ₹10 lakh crore market cap level currently. UltraTech is now the 3rd largest company on the exchange in terms of market valuation.
This achievement comes on the back of a remarkable rally in UltraTech Cement’s stock over the past month. The stock has surged nearly 16% in December alone, logging its best monthly performance since July 2022.
Share Price Hits Record High of ₹10,470
The stock broke above the ₹10,000 mark for the first time on December 13 and has consistently traded above this psychologically important level since then.
On Wednesday, UltraTech hit a new all-time high of ₹10,470 per share, jumping 4.51% during the day’s trading. The stock was among just 20 shares trading above ₹10,000 currently on Indian exchanges.
Strong Volume Growth, Nomura Upgrade Drive Rally
Analysts pointed to strong volume growth in the cement industry and Nomura’s upgrade on the stock as key triggers for the latest spurt.
Nomura revised its rating on UltraTech Cement from ‘neutral’ to ‘buy’ and also raised its target price massively to ₹11,500 per share.
The Japanese brokerage expects robust volume growth to continue in the sector, with cement sales rising 11% in the second half of FY24 after a 17% growth in H1 FY24.
Cement Sector Boosted By Government Spending, Real Estate Demand
The cement industry has been aided by increased government expenditure on infrastructure, affordable housing projects, and healthy demand from the urban real estate sector.
Leading producers like UltraTech have benefitted from lower raw material costs, moderate rains, and pricing power. This reflected in strong Q2 FY23 results for the sector.
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UltraTech Poised To Grow With New Capacities, Kesoram Demerger
With a total grey cement capacity of 137.85 million tonnes per annum (MTPA), UltraTech Cement is the 3rd largest cement maker globally, outside of China.
It is expanding capacity by 22.6 MTPA, which will enhance its leadership position in the Indian market. The company is also poised to increase its footprint in Southern and Western India through the acquisition of Kesoram’s cement business.
Shareholders of Kesoram will get 1 UltraTech share for every 52 shares held, as announced last month. This will provide UltraTech access to key markets like Telangana.
Conclusion: Market Leader On Course To Dominate Cement Space
UltraTech Cement’s milestone of crossing ₹3 lakh crore market cap underscores its dominant position in the Indian cement space.
With new capacities, strategic acquisitions like Kesoram, strong volume growth and favorable industry dynamics, the company looks set to bolster its leadership and reward shareholders further going forward.
References:
- Financial Results: Q2FY23. (n.d.). https://www.ultratechcement.com/about-us/media/press-releases/financial-results-q2-fy23
- P. (2023, August 11). UltraTech targets 200 MTPA cement capacity, aims to be among largest cement makers globally: Chairman K M. The Economic Times. https://economictimes.indiatimes.com/industry/indl-goods/svs/cement/ultratech-targets-200-mtpa-cement-capacity-aims-to-be-among-largest-cement-makers-globally-chairman-k-m-birla/articleshow/102654772.cms