Reliance Money - Ultratech Cement

COMPANY UNDER COVERAGE: Ultratech Cement Ltd
THEME: Cementing Growth
BSE CODE: 532538
PE (Q1FY07): 35.05X
CMP: Rs.889.10
52 Wk H/L: Rs.921.40/Rs.384.50

Short Term: Buy
Medium to Long Term: Buy


KEY THEMES
Positives
•Largest cement producer in the country
• Largest exporter of cement clinker
• Backing of the Aditya Birla group
• Fundamentals of the economy looking solid backed up by solid growth in housing and infrastructure sectors
• Demand for cement expected to outstrip supply in the immediate future
• Average cement consumption in India is on the lower side as against the world average leaving a lot of scope for increase in consumption


Negatives
• Indian exports to Sri Lanka may be affected due to protectionist policies of Sri Lanka
• Susceptible to freight rate vagaries particularly if freight rate depicts upward partiality
• Risk of overcapacity in the future
• In the long run, industry may have to face Chinese competition
• Supreme Court ban on overloading of trucks will have an adverse bearing on transportation cost

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