A discussion on #ULTRACEMCO 🧗
• Soon after Adani acquired ACC and Ambuja, Ultratech announced that its board had approved a capital expenditure of Rs 12,886 crore to increase production capacity to 154 million tonnes.
• Cement stocks have been under pressure for a long time now, owing to the continued rise in the energy prices, fuel prices, and the current environment of reduced demand. Ultratech has been no exception to this.
• Adding to the injury is the entry of Adani Group in the industry. Adani's entry is projected to exacerbate sector consolidation due to increased competition, as major players seek to maintain or increase their market share.
Due to these concerns, the stock of Ultratech has been cracking for the past few days. Is it the right time to enter into a position in Ultratech? 🤔
• By the end of FY23, UltraTech Cement's capacity will be 130 million tonnes. If the sector grows at a rate of 7-8 percent per year, they need to add 10 to 11 million tonnes each year, and they have declared a total of 22 billion tonnes over a two-year period. It is precisely in line with the expected growth rate and consumption.
• Adani’s acquisition of ACC and Ambuja is not an entry of new players. It is a mere change of ownership in the existing capacity.
• UltraTech declared three years ago that it would increase 50 million tonnes of capacity by 2030. Out of the 50 million tonne, they are now adding about 40 million tonne by 2025.Thus, the plans have not changed, just an acceleration is there, which seems necessary to maintain their number 1 position in the market.
• As seen in the chart, a strong historical support level (green line on the attached chart) exists at 5670 levels, from where, a reversal can be seen
• On the daily charts, the MACD line has crossed the signal line, indicating a bullish possibility
• A double bottom pattern is being formed on the charts and if it moves in the direction of its completion, then a reversal possibility exists
Please share your views too!