How Ultratech Cement Stock Hit its Record High During a Recession

By Aditya Raghunath

Investing.com -- On December 4, Ultratech Cement (NS: ULTC ) hit a lifetime high of Rs. 5,199. The stock had been trading around Rs. 4,625 on November 9 and around Rs, 3,800 levels at the start of October. How did it manage to gather so much momentum that it went up by almost 37% in two months?

A major reason for this is the government’s push on core infrastructure projects, demand in rural India gaining pace, and increased demand from individual home buyers. On Thursday, December 3, the company also announced a capex investment of Rs. 5,477 crore to expand capacity by 12.8 million tonnes per annum (mtpa).  This will take the company’s total capacity to136.25 mtpa.

“The additional capacity will be created in the fast-growing markets of the east, central and north regions of the country,” the company said.

An investment of this size clearly indicates the confidence the company has in the economic recovery. A very interesting point to note is that this will be funded through the company’s internal resources and won’t its plan to go debt-free.

Kumar Mangalam Birla, Chairman, Aditya Birla Group said, “This significant investment in a core infrastructure sector will accelerate the wheels of economic activity and aid the kickstart of the private investment cycle. The capital outlay, given the current economic backdrop, is aligned with the Government's Atmanirbhar Bharat program.”