Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
UBS Investment Research
UltraTech Cement
B eats estimates led by higher realizations
Event: Results higher than UBS-e and ahead of consensus
Ultratech reported net sales of Rs44bn (+9.5% y/y, -3% q/q), operating profit of
Rs12.3bn (+19% y/y, +13% q/q; above our estimate of Rs10.7bn and consensus
estimate of Rs9.6bn) and PAT of Rs6.8bn (up 22.5% y/y, -6% q/q; higher than
UBS-e and consensus expectations). Domestic cement and clinker volumes
declined 1.6% YoY & 9% QoQ to 9.46mt.
Impact: Healthy growth in realisation boosts margins
Net domestic cement realisation increased 6.5% QoQ and total cost per ton
remained flat QoQ. Though per ton power and fuel costs increased by ~18%, it was
offset by a decline in other expenditure and staff costs. The decline in other
expenditure is also due to lower maintenance costs in this quarter. On a YoY basis
per ton costs have increased by ~8%, led by 18/11% increase in power and
fuel/staff costs.
Action: Seasonal weakness likely to impact profitability
While Q1 is a strong quarter for cement companies, Q2 is the weakest quarter due
to low construction activity in the monsoon period (volumes and prices remain
under pressure). For its expansion projects of 9.2mtpa, Ultratech has placed the
equipment orders and expects them to be commissioned by Q1FY14. It will spend
~Rs110bn on the same over the next 3 years. We expect to receive further details
in Grasim’s conference call scheduled on Monday, 1st August 2011 at 9am IST.
Valuation: Sell rating and PT of Rs1,020
We value Ultratech at a one-year forward EV/EBITDA of 6.5x.
UltraTech Cement
UltraTech Cement (UltraTech) was formed when the former cement division of
L&T was demerged and bought by Grasim Industries of the Aditya Birla Group.
Recently, Grasim's demerged cement business (Samruddhi Cement) merged
with UltraTech, making UltraTech the largest cement company in India with a
capacity of about 49mt, and the eighth largest cement company globally. It has a
total capacity of about 52mt, including 3mt of overseas capacity (in Bangladesh,
Bahrain and UAE). UltraTech is also a leader in cement value-added products
such as white cement, wall-care putty and ready-mix concrete.
Statement of Risk
We believe the principal risk to cement companies earning estimates arises from
fall in cement prices and rise in raw material prices.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
UBS Investment Research
UltraTech Cement
B eats estimates led by higher realizations
Event: Results higher than UBS-e and ahead of consensus
Ultratech reported net sales of Rs44bn (+9.5% y/y, -3% q/q), operating profit of
Rs12.3bn (+19% y/y, +13% q/q; above our estimate of Rs10.7bn and consensus
estimate of Rs9.6bn) and PAT of Rs6.8bn (up 22.5% y/y, -6% q/q; higher than
UBS-e and consensus expectations). Domestic cement and clinker volumes
declined 1.6% YoY & 9% QoQ to 9.46mt.
Impact: Healthy growth in realisation boosts margins
Net domestic cement realisation increased 6.5% QoQ and total cost per ton
remained flat QoQ. Though per ton power and fuel costs increased by ~18%, it was
offset by a decline in other expenditure and staff costs. The decline in other
expenditure is also due to lower maintenance costs in this quarter. On a YoY basis
per ton costs have increased by ~8%, led by 18/11% increase in power and
fuel/staff costs.
Action: Seasonal weakness likely to impact profitability
While Q1 is a strong quarter for cement companies, Q2 is the weakest quarter due
to low construction activity in the monsoon period (volumes and prices remain
under pressure). For its expansion projects of 9.2mtpa, Ultratech has placed the
equipment orders and expects them to be commissioned by Q1FY14. It will spend
~Rs110bn on the same over the next 3 years. We expect to receive further details
in Grasim’s conference call scheduled on Monday, 1st August 2011 at 9am IST.
Valuation: Sell rating and PT of Rs1,020
We value Ultratech at a one-year forward EV/EBITDA of 6.5x.
UltraTech Cement
UltraTech Cement (UltraTech) was formed when the former cement division of
L&T was demerged and bought by Grasim Industries of the Aditya Birla Group.
Recently, Grasim's demerged cement business (Samruddhi Cement) merged
with UltraTech, making UltraTech the largest cement company in India with a
capacity of about 49mt, and the eighth largest cement company globally. It has a
total capacity of about 52mt, including 3mt of overseas capacity (in Bangladesh,
Bahrain and UAE). UltraTech is also a leader in cement value-added products
such as white cement, wall-care putty and ready-mix concrete.
Statement of Risk
We believe the principal risk to cement companies earning estimates arises from
fall in cement prices and rise in raw material prices.
No comments:
Post a Comment