UltraTech Cement - Q4FY22 First Cut - ICICI Direct

(CMP: Rs. 6,601; MCap: Rs. 1.91 lakh crore)

UltraTech cement reported operationally good results for Q4FY22 as the impact of higher fuel cost was not visible in the quarter.

Q4FY22 Earnings Summary - Standalone

- Net revenues were marginally lower than our estimates. It grew 8.6% YoY to Rs. 15,168 crore (vs I-Direct est. Rs. 15,535 crore). Sales volumes were flat YoY at 26.3MT (in-line with I-direct est: 26.7MT) on higher base effect while blended realisations were higher by ~9.6% YoY to Rs. 5,758/tonne. Capacity utilisation stood at 90%

- In terms of regional demand mix, demand across all regions (except North) remained muted except Central/South that recorded positive trend during Q4FY22

- Cost of production broadly remained flat QoQ (up 18.1%YoY) to Rs. 4641/t due to lower employee and other costs. Further, with the use of domestic linkage coal (~20% share) and available low cost fuel inventory (45-50 days), the average energy cost for the company came in lower at $164/tonne as against energy index cost of $222/tonne for Q4FY22

- As a result, EBITDA/t improved sequentially by 10.1% (down 15.4% YoY) to Rs. 1117/t (vs. I-direct est: Rs. 1000/t). Reported EBITDA was at Rs. 2943 crore (vs I-direct est Rs. 1,468 crore), with EBITDA margins coming in at 19.4% (down 575 bps YoY, up 159bps QoQ) - against our estimate of 17.2%

- With sharp reduction in the interest costs (down 46% YoY, up 6% QoQ to Rs. 175 crore) and positive tax adjustments of Rs. 178 crore, company reported higher PAT of Rs. 2,454 crore vs expected net profit of Rs. 1,468 crore. Net/debt to EBITDA now stands at 0.32x vs 3.26x reported in Dec-18

- During FY22, the company commissioned bara grinding unit of 2MT and 1.2MT in East, taking its total cement manufacturing capacity in India to 114.55 MT. The Company has commissioned 11MW of WHRS and 48MW of solar power. With this expansion the Company's green energy share has gone up to 19.7% vs 16% in Q3

While the long-term demand outlook stays intact, the near-term cost headwinds may lead to some moderation in the demand. The current cement prices are hovering at Rs. 30/bag higher than the exit rate of Q4FY22. If it sustains then it should help the company to mitigate the cost inflation impact in the forthcoming quarter.

We would be coming out with a detailed report soon post the conference call.

Shares of UltraTech Cement Limited was last trading in BSE at Rs. 6629.00 as compared to the previous close of Rs. 6612.70. The total number of shares traded during the day was 15804 in over 3694 trades.

The stock hit an intraday high of Rs. 6791.85 and intraday low of 6525.05. The net turnover during the day was Rs. 105438134.00.

Source : Equity Bulls

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UltraTechCement INE481G01011 Q4FY22 Results FirstCut ICICIDirect