Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
EARNINGS REVIEW
Ultratech Cement (ULTC.BO)
Neutral
In line with expectations; higher costs keep margins under pressure
What surprised us
Ultratech reported 3QFY11 net income of Rs3.2bn (-36% yoy), 5% above our
expectation, on lower tax rate. At the operating level, EBITDA came at
Rs7.3bn, down 30% yoy, largely in line with our expectation and 6% above
Reuters consensus. Top-line growth was flat yoy – while domestic cement
volumes were muted, up 1% yoy and 4% qoq , realizations were healthy,
+12% qoq , but down 3% yoy. In spite of healthy realizations, margins were
under pressure, as expected - EBITDA per ton came in at Rs748 (GSe:
Rs740), vs. Rs1080 in 3QFY10. EBITDA margins were down 886 bps yoy led
by lower realizations and higher costs - fuel costs were up 36% yoy. Star
Cement contributed 0.76mn of volumes in Q3, but reported loss of Rs270mn.
What to do with the stock
As highlighted earlier, the recovery in pricing and margins is slower than
expected, as cement companies are not able to pass on higher costs
through higher prices, given excess capacity and muted demand. Cement
demand continues to be a source of concern, as reflected in volumes, up
1% yoy for Ultratech (the largest cement player, with pan-India presence).
The company stated that there has been a slowdown in infrastructure and
real estate spending, with Southern markets experiencing yoy degrowth.
We lower our FY11E EPS estimate by 26%, as we adjust for Samruddhi
Cement’s 1Q profits. We also cut FY12-13E EPS on lower volume estimates
and higher coal costs. We retain our Neutral rating and 12m EV/RC based
Rs906 TP. The stock trades at 12m fwd EV/RC of 125% vs. 5-year historical
mean of 100%. Risks: Upside: faster than-expected recovery in prices,
downside: higher coal costs.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
EARNINGS REVIEW
Ultratech Cement (ULTC.BO)
Neutral
In line with expectations; higher costs keep margins under pressure
What surprised us
Ultratech reported 3QFY11 net income of Rs3.2bn (-36% yoy), 5% above our
expectation, on lower tax rate. At the operating level, EBITDA came at
Rs7.3bn, down 30% yoy, largely in line with our expectation and 6% above
Reuters consensus. Top-line growth was flat yoy – while domestic cement
volumes were muted, up 1% yoy and 4% qoq , realizations were healthy,
+12% qoq , but down 3% yoy. In spite of healthy realizations, margins were
under pressure, as expected - EBITDA per ton came in at Rs748 (GSe:
Rs740), vs. Rs1080 in 3QFY10. EBITDA margins were down 886 bps yoy led
by lower realizations and higher costs - fuel costs were up 36% yoy. Star
Cement contributed 0.76mn of volumes in Q3, but reported loss of Rs270mn.
What to do with the stock
As highlighted earlier, the recovery in pricing and margins is slower than
expected, as cement companies are not able to pass on higher costs
through higher prices, given excess capacity and muted demand. Cement
demand continues to be a source of concern, as reflected in volumes, up
1% yoy for Ultratech (the largest cement player, with pan-India presence).
The company stated that there has been a slowdown in infrastructure and
real estate spending, with Southern markets experiencing yoy degrowth.
We lower our FY11E EPS estimate by 26%, as we adjust for Samruddhi
Cement’s 1Q profits. We also cut FY12-13E EPS on lower volume estimates
and higher coal costs. We retain our Neutral rating and 12m EV/RC based
Rs906 TP. The stock trades at 12m fwd EV/RC of 125% vs. 5-year historical
mean of 100%. Risks: Upside: faster than-expected recovery in prices,
downside: higher coal costs.
No comments:
Post a Comment