Ultratech Cement Ltd - Q2FY18 Result Update - Kotak

Ultratech Cement Ltd - Q2FY18 Result Update - KotakUltratech Cement earnings were ahead of our estimates. Volumes are not comparable with last year due to amalgamation of cement assets of Jaiprakash Associates but volumes were in line with our estimates for the quarter. Blended realizations were better than our estimates which led to EBITDA improvement despite higher costs. Power and fuel cost and freight cost per tonne had moved up in line with higher pet coke and diesel prices. We expect costs to remain high going forward owing to higher power and fuel and freight costs per tonne but improvement in blended realizations going forward is likely to aid margins. We maintain positive view on the company.

We tweak our estimates to factor in slightly higher depreciation and interest charges from JP Associates plants for FY18 as well as higher volumes in FY19. We arrive at a revised price target of Rs 4547 (Rs 4474 earlier) based on average of 17x EV/EBITDA and $200 per tonne EV/Tonne for FY19. Owing to adequate upside from current levels, we upgrade the stock to BUY from ACCUMULATE earlier. Key risk to our estimates would come from lower than expected demand revival, steep increase in costs or pressure on cement prices.

Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs.4195 as compared to the previous close of Rs. 4024.05. The total number of shares traded during the day was 17510 in over 2648 trades.

The stock hit an intraday high of Rs. 4227.7 and intraday low of 4030.3. The net turnover during the day was Rs. 72893929.

Source : Equity Bulls

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