Ultratech Cement’s share price hit a fresh 52-week low of Rs 5,412, down 3 per cent on the BSE in Tuesday’s trade for the third consecutive session on the heels of the company announcing around Rs 12,900 crore-capital expenditure (capex) plan. The scrip has fallen 10 per cent in the past three trading days and plunged over 25 per cent so far this year. The stock of the largest player in the cement industry was trading at its lowest level since February 2021.
A sharp decline in the stock price of UltraTech has seen the company lost Rs 17,157 crores of market capitalisation in the last three trading days. With the decline in previous three days, UltraTech’s market price has slipped 35 per cent from its record high level of Rs 8,267 touched on November 8, 2021.
According to analysts at Sharekhan, this would aid Ultratech Cement in maintaining its leadership positioning in the sector. “We believe these aggressive capacity additions by large players can put undue pressure on operational profitability especially if cement demand does not resonate with the supply and energy costs do not normalize to a higher extent,” they said. Brokerages see up to 30 per cent upside on the stock going forward.
Ultratech Cement: Technical Outlook
Sumeet Bagadia, Choice Broking, said: “On a monthly chart, the stock has given a breakdown of its strong support at 6,900 and showed selling pressure. The stock has tested the 50 per cent Fibonacci Retracement Level (FRL) i.e 5,501 of its previous up move sustained below the same can show more downside toward 61.8 per cent FRL i.e. 5,000 levels. On a weekly chart, Stock has given a breakout of Head & Shoulder Pattern and sustained below 21 DMA which suggests downside momentum in the counter. A daily momentum indicator Stochastic & MACD has shown negative crossover which adds more weakness to the price. At present, Stoch has support around 5,260 breaching below the same can show more downside while resistance comes around 6,450-6,500 levels. One should avoid buying till some confirmation candle is formed.”
Tirthankar Das, Ashika Group, said: “The stock has been on a corrective decline, breaching crucial support levels at every interval to reassert that the present trend in the stock is down with consecutive lower low formation. The last five months saw the stock declining amidst the downward sloping ‘channel’ formation which further reaffirms of the negative outlook in the stock. Presently, the stock is flirting around the 50 per cent retracement (5,589) of the entire rally since Mar’20 onward (high: 8,269; Low: 2,910), a decisive close below which would maintain a sustained selling pressure towards 61.8 per cent retracement (4,957) which further coincides with the 4th leg of the pattern. However, the presence of oversold price reading in the oscillator (weekly as well as daily) might lead prices to witness consolidative price action. Hence price sustenance above 5,600 might accelerate the pullback towards 6,100-6,200 in a short term perspective. For investors, the ideal entry point would be around 4,950-5,000.
Ultratech Cement: Is It a Good Opportunity to Buy The Dip?
Ravi Singhal, vice chairman, GCL Securities Limited, said: “There is still room for growth as the monsoon season approaches. Additionally, the government is focusing on the South base cement company or supply chain and This will also have an impact, but near Rs 5,000 it is a good buy for the target of Rs 7,200.
Ravi Singh, vice president and head of research, Share India, said: “The recent nod by Ultra Tech cement on new expansion plan is expected to cause a stiff competition in the industry. However, the sustained increase in energy costs and partial rollback of price hikes last month are weighing on cement companies’ profit margins. The overall cement sector outlook seems challenging amid increasing demand and rising production costs. Ultra Tech cement has shown some recovery from lower levels but investors must wait for more correction to get the value buying levels.”
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