UltraTech Cement - 3QFY13 results expectations - Ambit

(UTCEM IN, mcap US$9.6bn, SELL, TP Rs2,058)

Analyst: Nitin Bhasin, nitinbhasin@ambitcapital.com, Tel: +91 22 3043 3211

UltraTech will report its 3QFY13 results tomorrow. We expect UltraTech's volumes to grow 12% sequentially with 3Q being a seasonally strong quarter. Inherent weakness in demand coupled with the delay in festival season would result in volume declining by 5% YoY. We expect realisations to decline 2% sequentially due to downward pressure on prices emanating from weak demand. Despite the increase in freight costs being partially offset by the correction in international coal prices, the negative impact of realisations, would result in EBITDA/tonne declining by 2% on a QoQ basis to Rs1,121

We expect the company to report a PAT of Rs6,483mn (up 5% YoY and 18% QoQ) which is marginally lower than consensus expectation of Rs6,632mn. At the current market price of Rs1,910 the stock is trading at 9.7x FY14E EV/EBITDA. Though our price target of Rs2,058 implies an upside from current levels, we remain SELLers on the stock, led by our expectation of lower than industry volume growth and profitability.

Source : Equity Bulls

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