Q4FY21 Result Update - UltraTech Cement - ICICI Direct

In Q4FY21, the company operated with plant utilisation of over 93% backed by strong demand across regions with east operating at almost 100% capacity utilisation. Rest all other regions barring south operated at over 90% leading to average capacity utilisation of 93% for the company in Q4. This led to sales volume growth of 29.6% YoY to 26.6 MT. With firm realisations (up 4% YoY, 1.3% QoQ), revenues grew 34.8% YoY to Rs. 13,966 crore (above I-direct estimate: Rs. 12,917 crore). Better fixed cost absorption kept cost of production under check that increased 1% QoQ only while remaining flat YoY. As a result, EBITDA/t for the quarter was higher at Rs. 1,321/t (vs. I-direct estimate of Rs. 1,218/t). On the leverage front, the company has successfully reduced its net debt/EBITDA ratio to 0.55x from 1.72x last year and 0.84x last quarter. The board had earlier sanctioned capex plans of 19.5 MT through a mix of brownfield and greenfield expansion. Commercial production from these capacities is expected to go on stream in a phased manner during FY22, FY23. With its focus on operational efficiencies and strong balance sheet, the company is now in a better position to withstand any near term slowdown in demand.

Valuation & Outlook

UltraTech has successfully integrated acquired assets while protecting its b/s. Given the positive outlook, the new capex targeting central and east region would address the issue of capacity constraint post FY24E. With a target to become net debt free by FY23E and with RoCE of +16%, we remain positive on the company and maintain BUY rating with a revised target price of Rs. 7500/share (i.e. 15.5x FY23E EV/EBITDA) (earlier TP Rs. 6300/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_UltraTech_Q4FY21.pdf

Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs.6487 as compared to the previous close of Rs. 6405.75. The total number of shares traded during the day was 48026 in over 6703 trades.

The stock hit an intraday high of Rs. 6618.95 and intraday low of 6300. The net turnover during the day was Rs. 313473420.

Source : Equity Bulls

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