UltraTech Cement 3QFY2014 performance highlights and results update
January 21, 2014, Tuesday, 11:07 GMT | 06:07 EST | 15:37 IST | 18:07 SGT
For 3QFY2014 UltraTech Cement (UltraTech) posted a 38.4% yoy decline in its bottom-line to Rs.370cr, impacted by poor operational performance, as blended realizations fell by 2.9% yoy. We remain Neutral on the stock.
OPM weak at 16.5%: UltraTech‘s top-line fell by 1.5% yoy to Rs.4,786cr on account of flat performance on the volumes front and a decline in cement realizations due to subdued demand. The company’s domestic cement and clinker sales remained flat at 9.7mn tonne. The sales volume of white cement and wall care putty rose by 10.3% yoy to 0.29mn tonne. Blended realizations fell by 2.9% yoy to Rs.4,763/tonne. The OPM fell by 497bp yoy to 16.5% on account of lower realizations and increase in operating costs such as raw material, power and fuel and freight costs. The bottom-line fell by 38.4% yoy to Rs.370cr and was in-line with our estimates.
Outlook and valuation: We expect UltraTech to post a 7.6% CAGR in its top-line over FY2013-15. However, the company’s bottom-line is expected to de-grow at a CAGR of 11.3% yoy over the same period due to weak pricing scenario and increasing cost pressures. At the current levels, the stock is trading at an EV/tonne of US$125 on FY2015E capacity. We continue to remain Neutral on the stock.