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| India Infoline Research Team / 10:17 , Jul 24, 2012 |
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CMP Rs1,598, Target Rs1,422, Downside 11%
- Ultratech Q1 topline grew by 16% yoy, marginally above our estimates. Average realization stood at Rs5,050/ton up 11% yoy and 6% qoq basis (better-than our estimate of Rs4,923/ton). Volume growth of 4% yoy was in-line with estimates.
- OPM contracted by 217bps yoy but improved sequentially by 123bps; higher staff, power and freight costs led to an OPM of 25.7% (vs est 27%). Freight cost rose by 35% yoy on account of increase in railway freight and hike in diesel prices.
- PAT for UCL grew 14%yoy (against our expectation of 19%yoy). Higher other income (up 157%yoy) boosted earning.
- In light of higher average realizations in the southern region, we believe realisation for UCL will remain buoyant in the near-term. This coupled with lower international coal price could translate into margin expansion going forward. However, the stock has run-up by 18% over the past two month thus limiting the scope of material upside.
- We thereby, downgrade UCL to SELL from Market Performer with a 9-mth target of Rs1,422
Result table
| (Rs m) |
Q1 FY13 |
Q1 FY12 |
% yoy |
Q4 FY12 |
% qoq |
| Net sales |
50,748 |
43,654 |
16.3 |
53,365 |
(4.9) |
| Other Operating Income |
161 |
390 |
(58.7) |
550 |
(70.7) |
| Material costs |
(7,444) |
(5,039) |
47.7 |
(7,689) |
(3.2) |
| Personnel costs |
(2,236) |
(1,841) |
21.5 |
(2,195) |
1.8 |
| Power and fuel costs |
(10,862) |
(10,367) |
4.8 |
(11,902) |
(8.7) |
| Freight cost |
(10,363) |
(7,691) |
34.7 |
(10,889) |
(4.8) |
| Other overheads |
(6,925) |
(6,836) |
1.3 |
(8,049) |
(14.0) |
| Operating profit |
13,079 |
12,271 |
6.6 |
13,190 |
(0.8) |
| OPM (%) |
25.7 |
27.9 |
-217 bps |
24.5 |
123 bps |
| Depreciation |
(2,281) |
(2,230) |
2.3 |
(2,332) |
(2.2) |
| Interest |
(498) |
(726) |
(31.4) |
(586) |
(15.0) |
| Other income |
688 |
268 |
157.0 |
1,450 |
(52.6) |
| PBT |
10,988 |
9,583 |
14.7 |
11,723 |
(6.3) |
| Tax |
(3,203) |
(2,752) |
16.4 |
(3,050) |
5.0 |
| Effective tax rate (%) |
29.2 |
28.7 |
43 bps |
26.0 |
313 bps |
| Exceptional Item |
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| Reported PAT |
7,785 |
6,831 |
14.0 |
8,673 |
(10.2) |
| Adjusted PAT |
7,785 |
6,831 |
14.0 |
8,673 |
(10.2) | Source: Company, India Infoline Research
Cost analysis
| As a % of net sales |
Q1 FY13 |
Q1 FY12 |
bps yoy |
Q4 FY12 |
bps qoq |
| Material costs |
14.6 |
11.4 |
318 |
14.3 |
36 |
| Personnel Costs |
4.4 |
4.2 |
21 |
4.1 |
32 |
| Power and fuel costs |
21.3 |
23.5 |
(220) |
22.1 |
(74) |
| Freight cost |
20.4 |
17.5 |
289 |
20.2 |
16 |
| Other overheads |
13.6 |
15.5 |
(192) |
14.9 |
(133) |
| Total costs |
74.3 |
72.1 |
217 |
75.5 |
(123) | Source: Company, India Infoline Research
Financial Summary
| Y/e 31 Mar (Rs m) |
FY11 |
FY12E |
FY13E |
FY14E |
| Revenues |
140,684 |
181,835 |
210,311 |
221,394 |
| yoy growth (%) |
93.2 |
29.3 |
15.7 |
5.3 |
| Operating profit |
28,608 |
42,425 |
52,876 |
55,130 |
| OPM (%) |
20.3 |
23.3 |
25.1 |
24.9 |
| Pre-exceptional PAT |
13,681 |
24,461 |
29,763 |
30,496 |
| Reported PAT |
13,681 |
24,461 |
29,763 |
30,496 |
| yoy growth (%) |
24.9 |
78.8 |
21.7 |
2.5 |
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| EPS (Rs) |
49.1 |
87.7 |
106.7 |
109.4 |
| P/E (x) |
28.7 |
16.1 |
13.2 |
12.9 |
| Price/Book (x) |
3.7 |
3.0 |
2.5 |
2.1 |
| EV/EBITDA (x) |
15.6 |
10.4 |
8.2 |
7.6 |
| Debt/Equity (x) |
0.5 |
0.5 |
0.4 |
0.4 |
| RoE (%) |
17.9 |
20.7 |
20.6 |
17.5 |
| RoCE (%) |
16.4 |
18.8 |
20.8 |
18.8 | Source: Company, India Infoline Research
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