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MOSL: Morning India (27/June/19): 1. UltraTech Cement (Profitability impacted by cost pressure); 2. Retail (Ground Reality)

MOrning India (27/June/19): 1. UltraTech Cement (Profitability impacted by cost pressure); 2. Retail (Ground Reality)

 

Today’s top research idea

UltraTech Cement: Profitability impacted by cost pressure

• Our analysis of UTCEM’s FY19 annual report highlights healthy cement volume growth of 20%YoY led by expansion and acquisitions of the company. However, margins suffered due to cost pressures as consolidated EBITDA/t decreased by 7% YoY to INR888. Consolidated EBITDA for the company has increased 10% to INR 68bn.
• Over FY13-19, while EBITDA CAGR stood at 7%, PAT remained almost stable due to higher interest cost.
• Operating cash flows remained healthy for FY19 while net debt/EBITDA increased from 2.3 in FY18 to 2.9 in FY19.
• The acquisition of Century’s cement asset and Binani has led to UTCEM increasing its capacity market share and take its pan-India capacity market share to 20%. We value UTCEM at 14.5x Sept' 21 EV/EBITDA and arrive at a TP of INR5,280 (implied EV/t of USD 215 on FY21 capacity).

Piping hot news

PSU banks may get Rs 40,000 cr capital; Rs 5,000 cr infusion likely for 3 insurers

• The government will likely infuse capital of around Rs 30,000-40,000 crore into public-sector banks (PSBs) in the current fiscal and another Rs 3,000-5,000 crore into three general insurance companies, banking sources told FE.