ICICI Securities puts 'hold' on UltraTech Cement

CMP: Rs 463.50
Target price: Rs 509
ICICI Securities (I-Sec) has downgraded its rating on UltraTech Cement to ‘hold’ from buy, saying thestock was fairly valued at current price, given the weak fundamentals of the cement sector in general. The brokerage has lowered the FY09 earnings estimate for the company by 10.2%, to factor in the delay in its 4.9-million tonne expansion at Tadipatri, Andhra Pradesh, and the significant increase in the cost of imported coal. I-Sec expects the company’s earnings per share for this financial year at Rs 77.7. “However, higher-than-expected realisations, primarily aided by strong prices in the South, are expected to partly offset fuel-cost pressure. In FY10, UTCL will benefit from the steep correction in imported coal prices and the reduction in CENVAT from 12% to 8% in December ‘08 ,” an I-Sec note to clients said.
Source: ET