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UltraTech Cement - Improved realisations drive margins…
UltraTech reported net sales of | 3715 crore and net profit of | 319
crore, which were higher than our respective estimates of | 3617 crore
and | 289 crore. This was on account of higher than expected cement
realisation. Sequentially, blended sales volume and blended realisation
increased 7% each. OPM improved 417 bps QoQ to 19% (our estimate:
17%) due to better realisations and flat cost QoQ. EBITDA per tonne has
increased 70% QoQ to | 722 per tonne in the quarter against our
estimate of | 612 per tonne. Going forward, we expect the topline to
improve on the back of increasing realisations and sales volume.
However, rising input costs will put pressure on margins.
ƒ Volumes, realisation decline on subdued demand
Blended sales volumes (cement and clinker) increased ~7% QoQ to
9.8 million tonnes (MTPA) while blended realisation improved ~7%
QoQ to | 3208 per tonne. Cement volumes increased ~4% QoQ to
9.34 MTPA while clinker volumes increased ~100% QoQ to 0.46
MTPA. Volumes were impacted during the quarter on account of
prolonged monsoons, political issues in the southern region and
Gujjar agitation in the northern region.
ƒ EBITDA/tonne improves ~70% QoQ to | 722 per tonne
The EBITDA per tonne increased ~70% QoQ to | 722 per tonne as
the net realisation improved ~8% QoQ. The total cost per tonne
remained flat QoQ at | 3069 per tonne as the increase in raw
material and freight cost was negated by the decline in employees
and others cost. Sequentially, the raw material cost and freight cost
has increased ~3% and ~4%, respectively, while P&F cost has
remained flat QoQ.
Valuation
At the CMP of | 1023, the stock is trading at 22.2x, 18.2x and 16.7x its
FY11E, FY12E and FY13E earnings respectively. It is trading at an
EV/EBITDA of 8.7x and 8.4x its FY12E and FY13E EBITDA, respectively.
On an EV/tonne basis, the stock is trading at $126 and $130 its FY12E and
FY13E capacities, respectively. We have valued the company at the
current replacement cost of $125 per tonne at its FY13E capacity of 51.9
MTPA. We maintain our ADD rating on the stock with a target price of |
1038 per share.
Net sales increase ~16% QoQ; realisation up ~7% QoQ, cement volumes up~4% QoQ
As the Q3FY11 result incorporate Samruddhi operations (merged with
Samruddhi in Q2FY11), the numbers are not comparable YoY. However,
on a like-to-like basis, net sales increased marginally by 0.9% to | 3715.2
crore. Sequentially, net sales increased ~16% on account of ~7% QoQ
increase in blended sales volume (cement & Clinker) to 9.8 MTPA and
blended realisation improved ~7% QoQ to | 3208 per tonne. Cement
volumes increased ~4% QoQ to 9.34 MTPA while clinker volumes
increased ~100% QoQ to 0.46 MTPA. As the company sells ~50% of its
cement output in the southern and western region, it benefited from the
improved cement prices in the regions during the quarter.
EBITDA per tonne increases ~70% QoQ to | 722 per tonne
The EBITDA per tonne increased ~70% QoQ to | 722 per tonne as the
total cost per tonne remained flat QoQ while net realisation improved
~8% QoQ.
The net raw material cost (after stock adjustment) has increased ~3%
QoQ to | 496 per tonne on account of an increase in cost of key raw
materials like slag and fly ash. The freight cost has increased ~4% QoQ to
| 743 per tonne on account of an increase in diesel prices and increase in
railway freight charges.
Power & fuel cost has remained flat QoQ at | 914 per tonne. The average
fuel cost for the company in Q3FY11 was $115 per tonne. Prices of
imported coal and petcoke have increased to $130 per tonne. The impact
of this will be seen in Q4FY11. Currently, the company is using ~45% of
imported coal, 35% of linkage coal, ~15% of petcoke and ~5% through
e-auctions/open market.
The total cost has remained almost flat QoQ at | 3069 per tonne as the
increase in raw material and freight cost was negated by a decline in
employees and others cost.
Net profit increased ~176% QoQ on increased operating margin
The net profit increased ~176% QoQ to | 319 crore in Q3FY11 as against
| 115.8 crore in Q2FY11. On a like to like basis, the net profit declined
~36% YoY. Depreciation cost remained flat QoQ to | 219.1 crore and
interest cost declined ~3% QoQ to | 60.6 crore.
Capex plan
The company has a capital outlay of | 10000 crore for the next three
years. This includes setting up of additional clinkerisation plants at
Chhattisgarh and Karnataka along with grinding units and packaging
terminals across various states. The clinker and grinding units are
expected to come on stream by Q2FY14E. After these expansions of 9.2
MTPA, the company will have an installed capacity of ~61 MTPA.
Valuations
After the merger with Samruddhi Cement, UltraTech became the largest
cement manufacturer with installed capacity of 48.9 MTPA. Moreover,
after the acquisition of UAE based Star cement, its installed capacity has
reached 51.9 MTPA.
At the CMP of | 1023, the stock is trading at 22.2x, 18.2x and 16.7x its
FY11E, FY12E and FY13E earnings, respectively. It is trading at an
EV/EBITDA of 8.7x and 8.4x its FY12E and FY13E EBITDA, respectively.
On an EV/tonne basis, the stock is trading at $126 and $130 its FY12E and
FY13E capacities, respectively. We have valued the company at the
current replacement cost of $125 per tonne at its FY13E capacity of 51.9
MTPA. We maintain our Add rating on the stock with target price of |
1038 per share.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
UltraTech Cement - Improved realisations drive margins…
UltraTech reported net sales of | 3715 crore and net profit of | 319
crore, which were higher than our respective estimates of | 3617 crore
and | 289 crore. This was on account of higher than expected cement
realisation. Sequentially, blended sales volume and blended realisation
increased 7% each. OPM improved 417 bps QoQ to 19% (our estimate:
17%) due to better realisations and flat cost QoQ. EBITDA per tonne has
increased 70% QoQ to | 722 per tonne in the quarter against our
estimate of | 612 per tonne. Going forward, we expect the topline to
improve on the back of increasing realisations and sales volume.
However, rising input costs will put pressure on margins.
ƒ Volumes, realisation decline on subdued demand
Blended sales volumes (cement and clinker) increased ~7% QoQ to
9.8 million tonnes (MTPA) while blended realisation improved ~7%
QoQ to | 3208 per tonne. Cement volumes increased ~4% QoQ to
9.34 MTPA while clinker volumes increased ~100% QoQ to 0.46
MTPA. Volumes were impacted during the quarter on account of
prolonged monsoons, political issues in the southern region and
Gujjar agitation in the northern region.
ƒ EBITDA/tonne improves ~70% QoQ to | 722 per tonne
The EBITDA per tonne increased ~70% QoQ to | 722 per tonne as
the net realisation improved ~8% QoQ. The total cost per tonne
remained flat QoQ at | 3069 per tonne as the increase in raw
material and freight cost was negated by the decline in employees
and others cost. Sequentially, the raw material cost and freight cost
has increased ~3% and ~4%, respectively, while P&F cost has
remained flat QoQ.
Valuation
At the CMP of | 1023, the stock is trading at 22.2x, 18.2x and 16.7x its
FY11E, FY12E and FY13E earnings respectively. It is trading at an
EV/EBITDA of 8.7x and 8.4x its FY12E and FY13E EBITDA, respectively.
On an EV/tonne basis, the stock is trading at $126 and $130 its FY12E and
FY13E capacities, respectively. We have valued the company at the
current replacement cost of $125 per tonne at its FY13E capacity of 51.9
MTPA. We maintain our ADD rating on the stock with a target price of |
1038 per share.
Net sales increase ~16% QoQ; realisation up ~7% QoQ, cement volumes up~4% QoQ
As the Q3FY11 result incorporate Samruddhi operations (merged with
Samruddhi in Q2FY11), the numbers are not comparable YoY. However,
on a like-to-like basis, net sales increased marginally by 0.9% to | 3715.2
crore. Sequentially, net sales increased ~16% on account of ~7% QoQ
increase in blended sales volume (cement & Clinker) to 9.8 MTPA and
blended realisation improved ~7% QoQ to | 3208 per tonne. Cement
volumes increased ~4% QoQ to 9.34 MTPA while clinker volumes
increased ~100% QoQ to 0.46 MTPA. As the company sells ~50% of its
cement output in the southern and western region, it benefited from the
improved cement prices in the regions during the quarter.
EBITDA per tonne increases ~70% QoQ to | 722 per tonne
The EBITDA per tonne increased ~70% QoQ to | 722 per tonne as the
total cost per tonne remained flat QoQ while net realisation improved
~8% QoQ.
The net raw material cost (after stock adjustment) has increased ~3%
QoQ to | 496 per tonne on account of an increase in cost of key raw
materials like slag and fly ash. The freight cost has increased ~4% QoQ to
| 743 per tonne on account of an increase in diesel prices and increase in
railway freight charges.
Power & fuel cost has remained flat QoQ at | 914 per tonne. The average
fuel cost for the company in Q3FY11 was $115 per tonne. Prices of
imported coal and petcoke have increased to $130 per tonne. The impact
of this will be seen in Q4FY11. Currently, the company is using ~45% of
imported coal, 35% of linkage coal, ~15% of petcoke and ~5% through
e-auctions/open market.
The total cost has remained almost flat QoQ at | 3069 per tonne as the
increase in raw material and freight cost was negated by a decline in
employees and others cost.
Net profit increased ~176% QoQ on increased operating margin
The net profit increased ~176% QoQ to | 319 crore in Q3FY11 as against
| 115.8 crore in Q2FY11. On a like to like basis, the net profit declined
~36% YoY. Depreciation cost remained flat QoQ to | 219.1 crore and
interest cost declined ~3% QoQ to | 60.6 crore.
Capex plan
The company has a capital outlay of | 10000 crore for the next three
years. This includes setting up of additional clinkerisation plants at
Chhattisgarh and Karnataka along with grinding units and packaging
terminals across various states. The clinker and grinding units are
expected to come on stream by Q2FY14E. After these expansions of 9.2
MTPA, the company will have an installed capacity of ~61 MTPA.
Valuations
After the merger with Samruddhi Cement, UltraTech became the largest
cement manufacturer with installed capacity of 48.9 MTPA. Moreover,
after the acquisition of UAE based Star cement, its installed capacity has
reached 51.9 MTPA.
At the CMP of | 1023, the stock is trading at 22.2x, 18.2x and 16.7x its
FY11E, FY12E and FY13E earnings, respectively. It is trading at an
EV/EBITDA of 8.7x and 8.4x its FY12E and FY13E EBITDA, respectively.
On an EV/tonne basis, the stock is trading at $126 and $130 its FY12E and
FY13E capacities, respectively. We have valued the company at the
current replacement cost of $125 per tonne at its FY13E capacity of 51.9
MTPA. We maintain our Add rating on the stock with target price of |
1038 per share.
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