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Ultratech Cement -------------------------------------------------------- Maintain UNDERPERFORM
3Q FY11: Sequential improvement as expected, but cost pressures remain
● Ultratech’s 3Q FY11 PAT stood at Rs3.2 bn, 9% lower than
estimates due to lower other income and a higher tax realisation.
Revenue at Rs37.1 bn was 2% lower than estimates whereas
EBITDA was in line. Numbers restated for cement business
merger indicate that PAT was down 36% YoY.
● Total cement volumes stood at 9.8 mn tonnes (up 8% QoQ) and
another 0.75 mn tonnes were sold by newly acquired company,
Star Cement. The average realisation went up 8% QoQ in line with
estimates. EBITDA/t improved sequentially to Rs706 in 3Q11 from
Rs439/t in 2Q11 due to better realisations, but was down 6% YoY.
● We update our model to reflect rising coal costs and marginally
reduce our cement volumes assumptions. We are now building in
7%/6% higher realisations for FY12/13, as we expect a portion of
increased costs to be passed on.
● We roll forward our model to Mar-12 and our target price stands at
Rs839 (Rs730 earlier). We maintain our UNDERPERFORM on
the stock as we expect oversupply and cost pressures to continue
3Q FY11: sequential improvement, cost pressures remain
Total cement volumes stood at 9.8 mn tonnes (up 8% QoQ) and
another 0.75 mn tonnes were sold by newly acquired company, Star
Cement. Average realisations went up 8% QoQ in line with estimates.
Ultratech’s 3Q FY11 PAT stood at Rs3.2 bn, 9% lower than estimates
due to lower-than-expected other income and higher tax realisations.
Revenue at Rs37.1 bn was 2% lower than estimates whereas EBITDA
was in line. Numbers restated for the cement business merger
indicate that PAT was down 36% YoY and revenue was flat YoY
Sequential improvement in EBITDA/t
EBITDA/t improved sequentially to Rs706 in 3Q11 from Rs439/t in
2Q11 due to better realisations, but was down 6% YoY. Power and
fuel costs/t went up 27% YoY due to a rise in imported coal costs from
US$92/t in 3Q10 to US$125/t in 3Q11. Freight costs/t rose 26% YoY
Ultratech has earmarked Rs56 bn towards a 9.2 mn tonne capacity
expansion at Chattisgarh (4.8 mn tonnes) and Karnataka (4.4 mn
tonnes). This new capacity is expected to be commissioned by early
FY14. An additional Rs45.7 bn is expected to be spent on
modernising and completing existing projects. Total planned capex
stands at Rs102 bn over the next three years.
Revise estimating, raising target price to Rs839
We update our model to reflect rising coal costs and marginally reduce
our cement volumes assumptions. We are now building in 7%/6%
higher realisations for FY12/FY13, expecting a portion of higher costs
to be passed on. We roll forward our model to Mar-12 and our target
price becomes Rs839 (Rs730 earlier). Maintain an UNDERPERFORM
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Ultratech Cement -------------------------------------------------------- Maintain UNDERPERFORM
3Q FY11: Sequential improvement as expected, but cost pressures remain
● Ultratech’s 3Q FY11 PAT stood at Rs3.2 bn, 9% lower than
estimates due to lower other income and a higher tax realisation.
Revenue at Rs37.1 bn was 2% lower than estimates whereas
EBITDA was in line. Numbers restated for cement business
merger indicate that PAT was down 36% YoY.
● Total cement volumes stood at 9.8 mn tonnes (up 8% QoQ) and
another 0.75 mn tonnes were sold by newly acquired company,
Star Cement. The average realisation went up 8% QoQ in line with
estimates. EBITDA/t improved sequentially to Rs706 in 3Q11 from
Rs439/t in 2Q11 due to better realisations, but was down 6% YoY.
● We update our model to reflect rising coal costs and marginally
reduce our cement volumes assumptions. We are now building in
7%/6% higher realisations for FY12/13, as we expect a portion of
increased costs to be passed on.
● We roll forward our model to Mar-12 and our target price stands at
Rs839 (Rs730 earlier). We maintain our UNDERPERFORM on
the stock as we expect oversupply and cost pressures to continue
3Q FY11: sequential improvement, cost pressures remain
Total cement volumes stood at 9.8 mn tonnes (up 8% QoQ) and
another 0.75 mn tonnes were sold by newly acquired company, Star
Cement. Average realisations went up 8% QoQ in line with estimates.
Ultratech’s 3Q FY11 PAT stood at Rs3.2 bn, 9% lower than estimates
due to lower-than-expected other income and higher tax realisations.
Revenue at Rs37.1 bn was 2% lower than estimates whereas EBITDA
was in line. Numbers restated for the cement business merger
indicate that PAT was down 36% YoY and revenue was flat YoY
Sequential improvement in EBITDA/t
EBITDA/t improved sequentially to Rs706 in 3Q11 from Rs439/t in
2Q11 due to better realisations, but was down 6% YoY. Power and
fuel costs/t went up 27% YoY due to a rise in imported coal costs from
US$92/t in 3Q10 to US$125/t in 3Q11. Freight costs/t rose 26% YoY
Ultratech has earmarked Rs56 bn towards a 9.2 mn tonne capacity
expansion at Chattisgarh (4.8 mn tonnes) and Karnataka (4.4 mn
tonnes). This new capacity is expected to be commissioned by early
FY14. An additional Rs45.7 bn is expected to be spent on
modernising and completing existing projects. Total planned capex
stands at Rs102 bn over the next three years.
Revise estimating, raising target price to Rs839
We update our model to reflect rising coal costs and marginally reduce
our cement volumes assumptions. We are now building in 7%/6%
higher realisations for FY12/FY13, expecting a portion of higher costs
to be passed on. We roll forward our model to Mar-12 and our target
price becomes Rs839 (Rs730 earlier). Maintain an UNDERPERFORM
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