Ultratech Cement’s Q2 earnings have left analysts with mixed opinions, as concerns over demand growth and pricing persist.

The company’s Q2FY25 performance slightly missed expectations, with lower volume growth and higher expenses affecting results. While demand growth remains weak and pricing is under pressure, there is hope for improvement in the second half of the fiscal year due to increasing infrastructure investments and steady growth in urban housing.

Morgan Stanley kept its ‘Overweight’ rating on Ultratech Cement, setting a target price of Rs 13,620 per share. Even though the Q2 EBITDA was below forecasts, the firm believes that Ultratech is nearing the end of its earnings downgrade phase. The report highlighted that a rise in demand and higher cement prices could lead to earnings growth in the coming years, with cost-saving measures boosting future profitability.

For Q2FY25, Ultratech Cement reported a 36 percent drop in net profit, falling to Rs 820 crore, mainly due to the monsoon season and project delays that impacted pricing. Analysts had expected a profit of Rs 1,062 crore. The company’s revenue from operations also dropped 2.3 percent year-on-year, coming in at Rs 15,635 crore, slightly above the Rs 15,579 crore estimate.

Nomura continues to have a positive outlook on Ultratech, maintaining a ‘buy’ rating with a target price of Rs 12,350 per share. The firm expects Ultratech’s margins to improve from Q2 onwards, with lower fuel and power costs boosting EBITDA per tonne. However, higher employee costs during Q2 impacted performance.

On the other hand, CLSA issued a ‘Hold’ recommendation with a target price of Rs 11,500 per share. Despite the drop in EBITDA due to lower profitability, CLSA expects a stronger second half of the year, driven by double-digit demand growth and cost-saving measures that could enhance profitability in the medium term.

Nuvama remains cautious, highlighting concerns about sector fundamentals and the possibility of earnings downgrades for FY25. They maintained a ‘hold’ rating with a target price of Rs 11,238 per share, citing risks such as rising costs or falling cement prices.

Ultratech Cement’s stock closed at Rs 10,839 on October 21, down 2.1 percent. So far this year, the stock has risen by 3 percent, underperforming the Nifty index, which is up 14 percent. Over the past year, Ultratech shares have gained 30 percent, slightly outperforming the Nifty’s 28 percent increase.