Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Ultratech Cement - 2QFY22 Result Update - Elevated Costs Pressure Led To Earnings Miss - Reliance Securities

Posted On: 2021-10-19 11:09:15 (Time Zone: IST)


UltraTech Cement (UTCEM) delivered a steady performance aided by resilient realization and healthy volumes, while the elevated cost inflation resulted in a performance miss. Consolidated EBITDA stood at Rs27.1bn (+1% YoY and -18% QoQ), below our estimate of Rs29.3bn, while EBITDA/tonne stood at Rs1,254 vs. Rs1,345 in 2QFY21 and Rs1,536 in 1QFY22. Sales volume improved by 8% YoY to 21.64mnT (+1% QoQ) vs. an estimate of 21.7mnT, while the average realization for cement came in at Rs106/tonne higher than the estimate at Rs5,126/tonne (+6.2% YoY and -1% QoQ). Opex/tonne increased substantially by 12.1% YoY and 8.6% QoQ at Rs4,299/tonne, which is Rs214/tonne higher then our estimate. Notably, finance costs declined considerably by 36% YoY and 30% QoQ to Rs2.3bn due to the repayment of debt and a reduction in the cost of debt. This is quite positive for the company, which offers comfort. APAT grew by 18% YoY to Rs13.1bn (-23% QoQ) vs. an estimate of Rs14.2bn, mainly due to an elevated cost pressure. We increase the EBITDA estimate by 10.2 %/10.1% /13.3% for FY22E/FY23E/FY24E respectively, mainly to factor the superior realizations in 1HFY22 and the recent rise in prices. Keeping our target multiple unchanged for FY24E at 15x, we maintain our BUY rating with a revised 12-month target price of Rs9,400.

Sales Volume Remains Steady

UTCEM continued to report an industry-leading volume growth by recording 8% YoY increase in sales volume at 21.64mnT (including 0.38mnT from white cement, 0.21mnT export volume and 1.21mnT from overseas subsidiaries). Notably, the sustained demand from infrastructure segment and improved traction from real estate demand supported sales volume. Trade demand accounted for 67% vs. 70% in 1QFY22.

Higher Costs Led To Earnings Miss

While the average cement realizations at Rs5,126/tonne (+6.2% YoY and -0.6% QoQ) remained resilient despite the seasonal weakness, a sharp increase in operating cost led UTCEM to report sub-par performance. Consolidated EBITDA stood at Rs27.1bn (+1% YoY and -18% QoQ), below our estimate of Rs29.3bn. Input cost/tonne (RM+P&F) surged to Rs1,964 (+11.9% YoY and +9% QoQ). However, freight cost/tonne and other exp/tonne increased by 0.4% QoQ and 20% QoQ, respectively. Hence, the sharp increase in input costs and other expenditures dented margins. Going forward, elevated fuel costs are expected to take a further toll on margins. However, the recent price hike (average price came to pre-monsoon level) and operating leverage led by higher utilization are likely to nullify the impact to a large extent.

Outlook and Valuation

UTCEM has been witnessing a better-than-industry growth over the years, which is expected to sustain going forward as well owing to the huge capacity addition plan by FY23 (19.5mnT). Further, OCF generation has been quite healthy in the recent years, mainly supported by steady realization and operating efficiencies, which have already enabled the company to deleverage its balance sheet meaningfully. We expect its net debt-to-EBITDA to reach 0.16x in FY22E and -0.97x in FY24E. Keeping our target multiple unchanged for FY24E at 15x, we maintain our BUY rating with a revised 12-month target price of Rs9,400. Notably, we have shifted to a 1-year target price, from the earlier 2-year. As we enter 2HFY22, instead of rolling forward the valuation, we maintain it based on FY24E earnings and shift to a 1-year target price of Rs9,400.

Link to the report

Shares of UltraTech Cement Limited was last trading in BSE at Rs. 7397.70 as compared to the previous close of Rs. 7403.50. The total number of shares traded during the day was 52529 in over 10218 trades.

The stock hit an intraday high of Rs. 7642.55 and intraday low of 7303.25. The net turnover during the day was Rs. 393220099.00.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Expect to see the industrial sector firing on all cylinders in H2FY22 - Acuite Ratings

Q2FY22 GDP Numbers - Suvodeep Rakshit - Kotak Institutional Equities

India Q2FY22 GDP data - JLL

The absolute real GDP value has exceeded the pre-pandemic levels of Q2FY20 by 0.33% - Acuite Ratings & Research

Post Listing view on Go Fashion by Mr. Santosh Meena, Head of Research, Swastika Investmart Ltd

Mutual Fund Review - November, 2021 - ICICI Direct

Maintain SELL on Asian Paints - Demand rebound strong; profitability cut steeper - HDFC Securities

Mphasis - 2QFY22 Result Update - Growth Resiliency Continues; Raise Target Price - Reliance Research

Gateway Distriparks - Rail continues to drive earnings - ICICI Securities

JSW Steel - Start of EBITDA contraction cycle - ICICI Securities

Shoppers Stop - Beneficiary of faster than expected recovery - ICICI Securities

Asian Paints - Q2FY22 Result Update - ICICI Securities

TVS Motor Company - EVs now at the center of its global ambitions - ICICI Securities

Havells India - Strong demand across regions; profitability likely to be muted in H2FY22 - ICICI Securities

Tata Communications - Rising visibility on revenue growth - ICICI Securities

Angel Broking - Business momentum intact for strong earnings growth - ICICI Securities

Q2FY22 Result Update - Rallis India - ICICI Direct

Q2FY22 Result Update - Navin Fluorine - ICICI Direct

Q2FY22 Result Update - Shoppers Stop - ICICI Direct

Company Update - Mastek Ltd - ICICI Direct

Q2FY22 Result Update - JSW Steel - ICICI Direct

Q2FY22 Result Update - VST Industries - ICICI Direct

HDFC Life Insurance - Q2FY22 First Cut - ICICI Direct

Federal Bank - Q2FY22 First Cut - ICICI Direct

Company Update - Taj GVK Hotels - ICICI Direct

Q2FY22 Result Update - Indian Hotels - ICICI Direct

Inox Leisure - Q2FY22 First Cut - ICICI Direct

Supreme Industries - Q2FY22 First Cut - ICICI Direct

Q2FY22 Result Update - Biocon Ltd - ICICI Direct

PVR Ltd - Q2FY22 First Cut - ICICI Direct

Q2FY22 Result Update - Asian Paints - ICICI Direct

Quant Pick - RBL Bank - ICICI Direct

Q2FY22 Result Update - IIFL Securities - ICICI Direct

Q2FY22 Company Update - Bank of Baroda - ICICI Direct

Q2FY22 Result Update - Syngene International - ICICI Direct

Company Update - Sonata Software - ICICI Direct

Q2FY22 Result Update - Gateway Distriparks - ICICI Direct

Q2FY22 Result Update - Tata Communications - ICICI Direct

Q2FY22 Result Update - Havells India - ICICI Direct

Mphasis - 2QFY22 Result Update - Growth Resiliency Continues; Raise Target Price - Reliance Research

Maintain ADD on Havells India - Outperformance continues; miss on margin - HDFC Securities

Indraprastha Gas - Company Update - EV vs CNG; TCO Economics Favour CNG - Reliance Research

FinTech Playbook - Discount Brokers - 'Nudging' the long tail of standalone brokers - HDFC Securities

Tata Communication - Revenue growth remains muted - YES Securities

Havells India Ltd - Q2FY22 Result Update - YES Securities

ICICI Lombard General Insurance - Q2FY22 Result Update - YES Securities

Syngene International Ltd - Lack of near term triggers - YES Securities

Mphasis - Q2FY22 First Cut - YES Securities

IndiaMART InterMESH - Q2FY22 First Cut - YES Securities

Sterlite Technologies - Q2FY22 First Cut - YES Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020