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UltraTech Cement 3QFY2013 performance highlights and results update

Contributed by Angel Broking

UltraTech Cement (ULTC)’s 3QFY2013 bottom-line performance was better than our estimates. The company posted a 2.5% yoy decline in its bottom-line to Rs.601cr. Realization was down by 3.7% on a sequential basis (up 6.1% yoy), which coupled with flat yoy performance on the volume front and increase in operating costs on yoy basis, resulted in a decline in net profit. We remain Neutral on the stock.

OPM flat yoy: During 3QFY2013, ULTC’s net sales grew by 6.3% yoy to Rs.4,857cr, largely on account of better realization. The company’s realization rose 6.1% yoy, however was down by 3.7% sequentially. The improvement in realization was offset to a large extent by a 6.1% yoy increase in operating cost per tonne. Thus OPM stood flat at 21.5% (21.3% in 3QFY2012) on a yoy basis. However, on a positive note, the operating cost per tonne was down 3.2% on a sequential basis, largely on account of a 6.1% decline in power and fuel (P&F) costs. P&F costs declined on account of fall in global coal prices.

Outlook and valuation: We expect ULTC to post a 12.3% and 14.5% CAGR in its top-line and bottom-line over FY2012-14, respectively. At the current levels, the stock is trading at an EV/tonne of US$170 on FY2014 capacity, which we believe is fair. We continue to remain Neutral on the stock.