UltraTech Cement - 3QFY2016 Result Update - Angel Broking

UltraTech Cement (UltraTech)'s 3QFY2016 numbers have come in better than our expectations on the top-line and operational fronts. The company's net sales rose by 4.7% yoy to Rs. 5,747cr, aided by better than expected volume growth of 7.1% yoy. Blended realization was under pressure, down by 2.3% yoy, and was slightly lower than our estimate. The EBITDA increased by 23% yoy to Rs. 1,044cr and the same was above our estimate of Rs. 975cr. The EBITDA margin came in at 18.2%, also above our estimate of 17.3%, backed by strong operational efficiency. The PAT came in at Rs. 509cr, up 39.6% yoy, which is above our estimate of Rs. 435cr, driven by margin expansion.

EBITDA margin healthy at 18.2%: For 3QFY2016, UltraTech reported an EBITDA growth of 23% yoy to Rs. 1,044cr, as against our estimate of Rs. 975cr. The strong EBIDTA performance was led by operational efficiency. The operating cost/tonne declined by 4.6% yoy to Rs. 4,055, led by 13.9% yoy decline in power & fuel cost/tonne, largely due to softening pet coke prices. Higher pet coke usage at 74% vs 65% in the sequential previous quarter helped savings in power & fuel cost. The EBITDA margin increased by 280bp yoy to 18.2% and was above our expectation of 17.3%. The blended EBITDA/tonne came in at Rs. 900, an increase of 16.1% yoy.

Outlook and valuation: We expect UltraTech to post a 13.6% CAGR in its topline on back of new capacity expansion and healthy expected realization over FY2015-17 period. The company's bottom-line is expected to grow at a CAGR of 28% yoy over the same period. At the current levels, the stock is trading at 13x EV/EBITDA and at an EV/tonne of US$165 on FY2017 capacity. We maintain our Accumulate rating on the stock with a revised target price of Rs. 3,107.

Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs.2842.75 as compared to the previous close of Rs. 2770.2. The total number of shares traded during the day was 11454 in over 1459 trades.

The stock hit an intraday high of Rs. 2851 and intraday low of 2780. The net turnover during the day was Rs. 32434881.

Source : Equity Bulls

Keywords