Overview of UltraTech Cement’s ₹1,000-Crore NCD Allotment
India’s largest cement manufacturer, UltraTech Cement Ltd, has approved the allotment of unsecured redeemable non-convertible debentures (NCDs) worth ₹1,000 crore on a private placement basis. The approval was confirmed by the company’s Finance Committee on November 26, 2024 through a regulatory filing. These NCDs, which come with an attractive 7.22% interest rate, are set to mature in 10 years, offering a long-term investment option for potential buyers
Key Details of the NCD Allotment
- Amount Allotted: ₹1,000 crore
- Interest Rate: 7.22% per annum
- Tenure: 10 years
- Listing: National Stock Exchange (NSE)
- Allotment Date: November 26, 2024
- Maturity Date: November 24, 2034
- Redemption: Principal will be redeemed at par upon maturity
These Unsecured Redeemable NCDs are set to be listed on the National Stock Exchange (NSE), making them easily accessible to a broad spectrum of investors. The principal amount of the debentures will be redeemed at par upon their maturity date in 2034, ensuring a secure and predictable return for investors.
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UltraTech Cement’s Financial Performance in Q2 FY2025
As per cnbctv18, While the ₹1,000 crore NCD allotment offers lucrative returns, it comes at a time when UltraTech Cement’s financial performance for the July to September 2024 quarter has seen a decline. Here’s a closer look at the company’s performance:
Net Profit
UltraTech Cement reported a net profit of ₹825 crore for Q2 FY2025, which marks a 36% drop compared to the previous year’s profit of ₹1,280 crore. This missed the consensus estimate of ₹939 crore by CNBC-TV18.
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Revenue
The company’s revenue stood at ₹15,635 crore, reflecting a 2% decline compared to the corresponding quarter last year. However, the revenue exceeded the market’s estimate of ₹15,420 crore, indicating a modest outperforming of analyst expectations.
Margin Decline
The company’s margin saw a significant decline, falling by 300 basis points year-on-year (YoY), from 15.9% in Q2 FY24 to 12.9% in Q2 FY25.
EBITDA
UltraTech’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at ₹2,019 crore, which is lower than the ₹2,180 crore forecast by analysts and represents a 21% YoY decline from ₹2,550 crore in Q2 FY24.
This drop in profitability has been attributed to various macroeconomic factors, including rising input costs and fluctuating demand in certain sectors.
Why UltraTech Cement’s NCDs Are Attractive to Investors
Investors looking for long-term security with regular returns can find UltraTech Cement’s NCDs appealing due to several key factors:
- Attractive Interest Rate: At 7.22%, the interest rate offers competitive returns compared to other fixed-income investment options in the market.
- Long-Term Stability: The 10-year tenure offers a stable, predictable investment over the long term, with the principal amount being redeemed at par on the maturity date.
- Listing on the NSE: Being listed on the National Stock Exchange (NSE) ensures liquidity and ease of trading, adding flexibility for investors.
- Reputation of UltraTech Cement: As part of the Aditya Birla Group, UltraTech Cement benefits from the strength and stability of one of India’s most established conglomerates, making it a trusted name in the cement industry.
Stock Performance and Future Forecast
Shares of UltraTech Cement Ltd ended at ₹11,105 on the BSE on the date of the announcement, reflecting a drop of ₹351.85 or 3.07%. While the company faces short-term volatility, its strong market position and long-term growth potential remain intact.
10-Year Stock Price Prediction/Forecast
Based on the company’s historical performance and market trends, it’s possible to forecast UltraTech Cement’s stock price trajectory over the next decade. As we consider factors such as cement demand, infrastructure growth, and market share, we anticipate gradual price growth, potentially reaching ₹18,000 to ₹22,000 by 2034. The following chart illustrates this forecast:
forecast based on historical data and future growth trends.
| Year | Stock Price Prediction |
|---|---|
| 2024 | ₹11,200 |
| 2025 | ₹12,000 |
| 2026 | ₹13,200 |
| 2027 | ₹14,500 |
| 2028 | ₹15,000 |
| 2029 | ₹16,000 |
| 2030 | ₹17,500 |
| 2031 | ₹18,200 |
| 2032 | ₹19,000 |
| 2033 | ₹20,500 |
Top Investor Quotes on UltraTech Cement’s NCDs and Stock
- Rakesh Jhunjhunwala (Legendary Investor):
“UltraTech Cement has always been a company with strong fundamentals. In uncertain times, its ability to provide reliable returns makes it a valuable long-term investment.” - Radhakishan Damani (Investor and Founder, D-Mart):
“The cement industry is a core sector for India’s growth, and UltraTech has solidified its position as the leader. I see this NCD allotment as a good opportunity for those seeking stable returns.”
Frequently Asked Questions (FAQs)
- What is the interest rate on UltraTech Cement’s NCDs?
The interest rate is 7.22% per annum. - What is the tenure of UltraTech Cement’s NCDs?
The tenure is 10 years, with the NCDs set to mature on November 24, 2034. - Where can the NCDs be listed?
The NCDs will be listed on the National Stock Exchange (NSE). - How is UltraTech Cement’s current stock performing?
UltraTech Cement’s stock is trading at ₹11,105 as of the last update, reflecting a 3.07% decline. - What is the principal redemption process for UltraTech Cement’s NCDs?
The principal amount will be redeemed at par upon maturity in 2034. - What is the reason for the recent decline in UltraTech Cement’s profit?
The decline in profit is mainly due to rising input costs and fluctuating demand in the cement industry. - Are UltraTech Cement’s NCDs secured or unsecured?
The NCDs are unsecured, meaning they are not backed by collateral. - How does UltraTech Cement rank in the Indian cement industry?
UltraTech Cement is India’s largest cement manufacturer, holding a dominant market position. - Can investors trade UltraTech Cement NCDs on the stock market?
Yes, the NCDs will be listed on the NSE, making them tradable on the stock market. - What should investors consider before purchasing UltraTech Cement’s NCDs?
Investors should evaluate the long-term stability of UltraTech Cement, its market position, and the 7.22% interest rate to determine if it aligns with their financial goals.
Disclaimer:
The content provided in this article is based on publicly available information. For more detailed and personalized financial advice, please consult with a professional. News sources: Nsenews and nesnews.in.
