JP Morgan maintains the ’Overweight’ rating on Ultratech Cement with a revised target price of Rs 950. After the proposed restructuring, Ultratech is likely to emerge as India’s largest pure play cement company with capacity close to 50 MT, low leverage and strong free cash flow generation. Additionally , the proposed holding structure would allow the company to raise equity for any large acquisitions.
However, little operational synergy given that most of Grasim’s cement brands had already been migrated to Ultratech . While timelines are not yet clear, given that Ultratech has yet to formally discuss any restructuring, it is likely going to take six-nine months. Given that going forward it would become India’s largest cement company with a pan-India presence, it should trade at par with peers.