UltraTech Cement (BOM:532538)

QUOTE AND NEWS
The Hindu Business Line  Dec 18  Comment 
Court refuses stay on company’s petition against the State Mining Department
The Hindu Business Line  Dec 17  Comment 
In a set back to leading cement maker UltraTech Cement, the Mines Department of Rajasthan Government on Tuesday retook the possession of 10 square kilometres of limestone mining area in...
The Economic Times  Dec 17  Comment 
"UltraTech Cement is a 'SELL' call with a target of Rs 2400 and a stop loss of Rs 2460."
The Economic Times  Dec 15  Comment 
"UltraTech Cement Ltd is a 'BUY' call with a target of Rs 2615 and a stop loss of Rs 2520."
The Economic Times  Dec 11  Comment 
"Ultratech Cement Ltd is a 'BUY' call with a target of Rs 2600 and a stop loss of Rs 2500."
The Economic Times  Nov 27  Comment 
It makes much more sense in acquiring assets in India where actually you are going to see a huge boom going ahead.
The Economic Times  Nov 11  Comment 
'UltraTech Cement is a 'BUY' call with a target of Rs 2680 and a stop loss of Rs 2620.'
The Economic Times  Nov 7  Comment 
"UltraTech Cement is a 'BUY' call with a target of Rs 2640 and a stop loss of Rs 2520."
The Economic Times  Oct 20  Comment 
Ultratech Cement had on Saturday reported 47 per cent increase in consolidated profit after tax for the July- September quarter at Rs 416 crore.
The Hindu Business Line  Oct 20  Comment 
UltraTech Cement made rapid strides to emerge the top gainer on the NSE ahead of the close on Monday. At 3.25 pm the stock was trading firm at ₹2,453.60. This represented a gain of 5.86 per cent o...




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UltraTech (ULT), an Aditya Birla Group Company and a 51% subsidiary of Grasim, has a capacity of 21.9 MT, thus making it the third largest cement producer in the country (little over 10% market share). The company has presence in the western, eastern and southern regions. It also manufactures ready mix concrete (RMC) and is the largest exporter of cement clinker. Its export markets span out around the Indian Ocean, Africa, Europe and the Middle East.

During FY09, UltraTech Cements reported 16% YoY growth in the topline on account of sustained demand for the commodity and higher cement prices. The company witnessed marginal decline in operating profits mainly on account of higher energy and raw material costs. The total cost of operation went up by nearly 24% YoY. In FY09, subdued performance at the operating level, higher interest costs and depreciation charges exerted pressure on bottomline growth.

Post FY04, with the upturn in cement prices the company’s performance improved. The result of branding and benefits of turnaround also kicked in. However, any decline in sales realisations or slowdown in exports (as capacities are also coming up in Middle East) and the inability of domestic markets to consume unsold export quantity will impact margins. We are positive on the sector’s growth prospects owing to infrastructural activity taking place to support and sustain the current economic growth. However, the upcoming planned capacities have started exerting downward pressure on realisations. The company had embarked on a capex plan of around Rs 20 bn to be spent over the next 2 to 3 years, which includes capacity expansion, setting up of captive power plants and ready mix concrete plants. This expansion will be funded through internal accruals. However, if prices soften at a faster rate than expected, it might put pressure on the company’s cash flows.


Financial performance snapshot
(Rs m) 4QFY08 4QFY09 Change FY08 FY09 Change
Net sales 16,010 18,601 16.20% 55,088 63,831 15.90%
Expenditure 11,116 13,271 19.40% 37,830 46,767 23.60%
Operating profit (EBITDA) 4,895 5,331 8.90% 17,258 17,064 (1.10%)
EBITDA margin 30.60% 28.70% 31.30% 26.70%
Other income 280 287 2.80% 1,007 1,036 2.80%
Interest 212 340 60.30% 823 1,255 52.50%
Depreciation 650 906 39.40% 2,372 3,230 36.20%
Profit before tax/(loss) 4,312 4,372 1.40% 15,070 13,615 (9.70%)
Tax 1,483 1,277 (13.90%) 4,994 3,844 (23.00%)
Profit after tax/(loss) 2,829 3,095 9.40% 10,076 9,770 (3.00%)
Net margin 17.70% 16.60% 18.30% 15.30%
No of shares (m) 124 124
Diluted EPS (Rs)* 78.5
P/E (times) 7.2
  • trailing twelve month earnings


Cost break up
(as a % of sales) 4QFY08 4QFY09 FY08 FY09
Consumption of raw materials 11.20% 13.80% 9.50% 9.60%
Staff cost 3.10% 3.00% 3.00% 3.40%
Power and fuel 23.10% 21.80% 22.80% 26.80%
Outward freight 17.60% 16.70% 17.60% 16.80%
Other expenditure 14.40% 16.00% 15.80% 16.60%


Quarterly Result Analysis- Sept '09

Performance summary

- Topline grows by 10.4% YoY on the back of higher volumes.

- Operating profits grow robustly by 58.4% YoY growth, supported by growth in topline and lower cost of operation.

- Despite higher other income and lower finance charges, growth in the bottomline is capped at around 52.8% YoY owing to higher tax expenses.


Financial performance snapshot
(Rs m) 2QFY09 2QFY10 Change 1HFY09 1HFY10 Change
Net sales 13,962 15,408 10.40% 29,250 35,268 20.60%
Expenditure 10,995 10,708 (2.60%) 21,496 23,068 7.30%
Operating profit (EBITDA) 2,967 4,700 58.40% 7,754 12,199 57.30%
EBITDA margin 21.30% 30.50% 26.50% 34.60%
Other income 278 308 10.60% 216 318 47.10%
Interest 309 299 (3.30%) 556 628 13.00%
Depreciation 808 967 19.70% 1,519 1,902 25.20%
Profit before tax/(loss) 2,129 3,743 75.80% 5,895 9,987 69.40%
Tax 487 1,234 153.10% 1,603 3,300 105.90%
Profit after tax/(loss) 1,642 2,509 52.80% 4,292 6,687 55.80%
Net margin 11.80% 16.30% 14.70% 19.00%
No of shares (m) 124.5 124.5
Diluted EPS (Rs)* 97.7
P/E (times) 8.4
                                                                  *trailing twelve month earnings


What has driven performance in 2QFY10?

- UltraTech Cement achieved 10.4% YoY growth in topline during 2QFY10 on account of higher volumes. While production volumes were up 12% YoY, growth in domestic dispatches stood at nearly 11% YoY during the same period under consideration. While demand for the commodity is still ticking in, upcoming capacities have started exerting pressure on realisations.

- The impact of softening of fuel prices has started kicking in. The company had set up captive power plants to contain costs, which also helped the company contain overall costs. These benefits resulted in 16% YoY fall in overall variable costs. The overall cost of production for the quarter was lower by 2.6% YoY. This coupled with volume driven double digit growth in revenues led to 9.3% expansion in operating margins.

- The growth in profits before tax (PBT) stood at 75.8% YoY, outpacing growth at the operating level. This is owing to higher other income, lower interest costs and less than proportionate growth in depreciation.

- The company has planned a capital outlay of Rs 20 bn to set up captive thermal power plants of 25 MW over the next two years. The planned investment expenditure also includes setting up additional grinding and evacuation facility and waste heat recovery systems across units for generating power out of waste gases. The company has completed its capacity expansion plans. Hence, going forward too we do not foresee interest or asset replacement cost to significantly impact the profitability of the company.

- At the net level, growth in profits stood at 52.8% YoY. Compared to PBT, growth in bottomline slowed down on account of higher tax outgo.


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Ultra Tech Cement (NSE:EQULTRACEMCO)

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