MOSL: ULTRATECH CEMENT (Buy)-Margin beat led by better realization-Volumes in-line
Ultratech Cement: Margin beat led by better realization; Volumes in-line
(UTCEM IN, Mkt Cap USD17.4b, CMP INR4114, TP INR4818, 17% Upside, Buy)
- Volumes grow led by JPA ramp-up: 4QFY18 volumes rose 31% YoY to 18.46mt (est. of 18.2mt), as JPA operated at 75% utilization. We estimate ex-JPA volumes to grow at 8% YoY. Realizations rose 2% QoQ to INR4,877/t (est. of INR4,794) due to higher prices in the central and east markets. Net sales rose 36% YoY (+19% QoQ) to INR90.02b (est. of INR87.3b).
- Sequential improvement in profitability (YoY numbers not comparable due to JPA acquisitions): Cost/t declined 1% QoQ, led by a reduction in staff cost and other expenses. EBITDA increased 34% QoQ to INR17.02b (est. of INR14.4b), translating into EBITDA/ton of INR922 (+INR122 QoQ; est. of INR791), with margins at 18.9% (-0.5pp YoY; +2.2pp QoQ) due to higher QoQ realizations and lower cost curve. Reported PAT stood at INR4.9b (+16% QoQ), while adj. PAT was INR6.3b (+81% QoQ; est. of INR4.9b), as INR2.26b cost was provided toward stamp duty charges for JPA’s assets.
- FY18 performance: Grey cement volumes rose 21% YoY to 59.3mt due to ramp-up of JPA. Revenues rose 25% YoY to INR297b, as blended realizations increased 3% YoY. Blended EBITDA/t stood at INR970 (-2% YoY), led by a 3% YoY increase cost/t to INR3,943, partially offset by better realization. Hence, EBITDA rose 18% YoY to INR58.8b, while PAT fell 20% YoY to INR21.07b due to higher interest and depreciation cost related to JPA acquisitions.
UltraTech Cement Limited is engaged in the business of cement and cement-related products. The Company manufactures a range of products that cater to construction needs from foundation to finish, including Ordinary Portland Cement (OPC), Portland Blast Furnace Slag Cement (PSC), Portland Pozzolana Cement (PPC), white cement and white cement-based products, ready mix concrete, including specialty concrete, building products, such as aerated autoclaved concrete (AAC) blocks and joining mortars and a host of others in retail formats. Its geographical segments include India and Rest of the World. The Company focuses on various areas, including alternative fuels, waste heat recovery systems, carbon dioxide emission reduction, waste management, water re-cycling and bio-diversity management. It has over 10 integrated cement units, approximately 10 grinding units, a white cement unit, a wall care putty, over five bulk terminals and over 100 ready mix concrete units.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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