UltraTech Cement - In-line strong performance; Capex plan retained - HDFC Securities

UTCEM delivered yet another stellar quarter, as its 4QFY21 consolidated net sales/EBITDA/APAT soared 18/19/15% QoQ (33/51/61% YoY) to INR 144.1/36.9/18.1bn respectively. It is driven by robust 16/30% QoQ/YoY volume growth. UTCEM has further reduced debt, resulting in net debt/EBITDA of 0.55x (vs 1.8x YoY). We continue to like UTCEM for its strong volume focus along with superior margin delivery and WC controls. We maintain BUY with a higher target price of INR 7,425/share (16x Mar'23E consolidated EBITDA).

4QFY21: Grey sales volume/revenue surged 17/19% QoQ on market share gain. Utilisation firmed up to 96% (vs 83/74% QoQ/YoY). Grey NSR firmed up 2/3% QoQ/YoY. Even RMC and white/putty revenues increased 19/33% YoY to INR 6.7/5.6bn respectively. UTCEM has increased usage of imported coal to optimise fuel cost. Further, fixed costs savings led to opex falling by 2% YoY, bolstering unitary EBITDA to INR 1,328/MT (2/7% QoQ/YoY).

Outlook: UTCEM's ongoing 19.5mnMT expansion would be operational by FY23/1QFY24. The company will continue to reduce debt to become a net cash company. It currently has 125MW of WHRS, which it would increase to 304MW by mid-FY24 in order to meet ~25% of its power requirement. UTCEM stands to gain ~INR 2bn from royalty savings due to a revision in the MMDR Act. The company will continue to pay out 15-20% of cash flow as dividend, going forward, with FY21 dividend at INR 37/share. UTCEM has stated that it intends to keep INR 100bn cash liquidity in hand for future inorganic opportunities. WC cycle stood at 15days vs 28days YoY, led by increased creditor days and decreased inventory days. Net debt fell 62% YoY to INR 63bn. OCF grew ~60% to INR 111bn due to increased PBT and WC controls. Capex increased by 9% to INR 18bn. FCF, hence, grew ~70% to INR 92bn. We broadly maintain our earnings estimates for FY22/23E.

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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