23 April 2014
4QFY14 Results Update | Sector:
Cement
Ultratech Cement
BSE SENSEX
22,877
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
6,841
UTCEM IN
274.2
595.2/9.7
2,275/1,405
6/1/-3
CMP: INR2,171
TP: INR2,340
Neutral
Operating performance in-line, as lower realizations off-set higher volumes
Net sales grew 8.2%YoY (+22% QoQ) to INR58.3b (in line). Grey Cement volume
beats estimates at 12.18mt (+9.4% YoY, +22% QoQ v/s est 11.58MT). Blended
realization's (incl. white cement) stood at INR 4,723/ton (flat QoQ v/s est
INR4,867/ton). Grey cement realizations surprised negatively with QoQ flat trend
at INR3,912/ton (-2.5% YoY, -0.6% QoQ) v/s est of INR4,189/ton, due to higher
clinker mix – otherwise domestic realizations has gone up ~2% QoQ.
EBITDA de-grew 5%YoY (+50% QoQ) to INR 11.4b (v/s est INR11.8b), translating
into EBITDA margins of 19.6% (+3.6pp QoQ & -2.6pp YoY; v/s est 20.2%). Blended
EBITDA/ton stood at INR926 (-INR137 YoY, +INR171 QoQ) v/s est INR1,017/ton.
Weaker realizations translate into slippage in profitability despite cost savings
from lower staff expense and benefits of operating leverage.
Higher other income (treasury income and sales tax refund), lower interest
(repayment of short term loans) and tax write back led to reported PAT of
~INR8.3b (v/s est ~INR6.6b). Adjusted PAT (tax write back of INR956m) stood at
INR7.6b, +5% YoY (+127% QoQ). It has declared dividend of INR9/share.
Raising grey cement volume assumptions (FY15E) to 9.8% (v/s 8% earlier), while
lowering realization assumption to INR233/ton (v/s INR250/ton earlier). It
translates into EBITDA/ton of INR997/1,121 in FY15/16 (marginal cut from earlier
est.). Consequently, EPS for FY15/16 remain largely intact (cutting by 1/1.6%).
Based on preliminary estimates for consolidation of Jaypee's Gujarat plant, the
stock trades at 25.2x/19x FY15/16 EPS, 12.4/10.2x EV/EBITDA and USD151/ton.
Current valuations factor in for potential recovery in FY15/16. Maintain
Neutral
with TP of INR2,340 (FY16 EV/ton of USD160/ton and EV/EBITDA of 11x FY16E).
Financials & Valuation (INR Million)
Y/E Mar
Net Sales
EBITDA
AdjEPS(INR)
Gr. (%)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
EV/EBITDA
( )
EV/Ton
( S )
2014 2015E 2016E
200,779232,940267,139
36,160 46,040 55,800
75.6
-21.9
12.8
14.4
28.7
3.5
15.6
155
94.3
24.7
14.2
16.4
23.0
3.1
12.3
149
114.5
21.4
15.1
18.3
19.0
2.7
10.2
148
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.