Ultratech Cement (Q1 FY13)

India Infoline News Service | Mumbai |

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

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     -   -
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
BSE 4,348.00 92.20 (2.17%)
NSE 4,311.80 43.60 (1.02%)

***Note: This is a NSE Chart

 

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