Ultratech Cement Q2FY18 Result Update Rating - HOLD - Arihant Capital Markets

For the quarter Q1 FY18 Ultratech Cement's realizations witnessed a steady growth of 7.28% on a YoY basis. Domestic sales volume increased by 17.6% to 12.41 mnt while the total volumes grew by 17.3% to 13.1 mnt YoY.

Ultratech Cement's standalone revenue came in at Rs 6671 cr vs. Rs. 6195 cr, a growth of 7.6% on Y-o-Y basis. On consolidated basis the revenue for the quarter stood at Rs 6936 cr vs. Rs 6508 cr Y-o-Y. EBITDA margins contracted by 100 bps to 23% on Y-o-Y basis. Net profit after tax for the quarter decreased by 30% YoY on consolidated basis to Rs 424 cr while standalone PAT stood at Rs. 431 cr. Total comprehensive income for the quarter stood at Rs 425 cr vs. Rs 627 cr on consolidated basis, a fall of 32% YoY.

Energy cost increased by 26% to Rs 925/t vs Rs.737/t. Impacted by increased petcoke prices by 70% at USD$ 95/t and higher usage of industrial waste. Logistics costs increased by 5% to Rs.1089/t. Raw materials cost increased by 3% YoY to Rs.478/t on increased usage of additives.

Ultratech Cement expects to further take advantage from acquired assets as month on month operational costs are declining and steady growth in capacity utilization. Company expects to narrow the gap in EBITDA per ton between existing and new assets. Company further has accelerated sales and acquired superior marketing and logistics services. Going forward company focuses on network optimization, enhancing EBITDA, cash flow management and debt reduction. Company has targeted to break cash even by June 2018 on newly acquired assets.

Valuations:

We have valued the stock using EV/EBITDA(x) and have ascribed EV/EBITDA multiple of 19.5(x) to its FY19E estimates & arrived at fair value of Rs. 4,571 per share. We have 'HOLD' rating on the stock.

Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs.4415.15 as compared to the previous close of Rs. 4488.3. The total number of shares traded during the day was 6726 in over 1081 trades.

The stock hit an intraday high of Rs. 4520 and intraday low of 4413. The net turnover during the day was Rs. 30006445.

Source : Equity Bulls

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