UltraTech Cement Ultravolt launch adds value but limited near-term earnings impact
Ultratech Cement Ltd.
HOLD
₹11,275
₹11,081
₹12,138
7.65%
Investment View and Revised Target Price
ICICI Securities’ September 4, 2026 company update on UltraTech Cement focuses on the formal launch of its wires and cables business under the Ultravolt brand. The broker maintains its HOLD recommendation and raises its target price to Rs 12,138 per share from Rs 11,900, principally to incorporate value for the new business.
The CMP used in the report is Rs 11,275, implying around 8 per cent potential upside to the revised target price.
Ultravolt Launch and Distribution Strategy
Backed by the Aditya Birla Group, UltraTech Cement aims to build Ultravolt as a national wires and cables brand and become one of the industry’s top two players within five years. The group intends to launch the business at a pan-India scale rather than test individual regions.
- The initial distribution plan includes reaching more than 1 lakh retailers.
- Availability is planned through more than 5,000 UltraTech Building Solutions outlets.
- The rollout will cover more than 500 districts and 6,000 pin codes.
- More than 1,600 electricians had been onboarded before launch, while the company aims to train more than 40,000 electricians over the following year.
Ultravolt’s Jhagadia manufacturing facility in Bharuch, Gujarat, has been commissioned and represents India’s second-largest wires capacity at launch. Investment in the venture is Rs 18,000 million.
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Wires and Cables Industry Outlook
ICICI Securities views wires and cables as an attractive category, citing expected industry growth of 10 to 15 per cent CAGR over the next few years. The broker also highlights asset turns of 5 to 7 times, established-player return on equity of 15 to 25 per cent and EBITDA margins of 8 to 14 per cent.
However, the broker believes the new segment is unlikely to materially move the needle for UltraTech Cement in the near term. As a new entrant pursuing an ambitious rollout, Ultravolt could incur losses initially.
Ultravolt Valuation
For valuation, ICICI Securities values Ultravolt on a price-to-sales basis rather than earnings. The broker assumes FY28E revenue of Rs 30,000 million, a net working-capital requirement of Rs 5,000 million and a 2.5 times price-to-sales multiple, representing about a 30 per cent discount to established peers.
This produces an equity value of Rs 70,000 million, or Rs 238 per UltraTech Cement share. The broker retains its valuation of the core cement business at 17 times FY28E EV/EBITDA, which gives Rs 11,900 per share. Adding the wires and cables valuation results in the revised target price of Rs 12,138.
Financial Summary
| Financial metric | FY25 Actual | FY26 Actual | FY27E | FY28E |
|---|---|---|---|---|
| Net revenue (Rs million) | 7,59,551 | 8,85,115 | 10,11,687 | 11,33,031 |
| EBITDA (Rs million) | 1,25,575 | 1,70,202 | 1,90,568 | 2,16,358 |
| Adjusted net profit (Rs million) | 61,471 | 83,200 | — | — |
| EBITDA margin | — | — | — | 19.1 per cent |
| EPS (Rs) | — | — | 320.4 | 378.5 |
Key Risks
Upside Risks
- A sharp rise in cement prices.
- A sharp decline in fuel costs.
Downside Risks
- A sharp fall in cement prices.
- A major surge in fuel prices.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
