UltraTech Cement (UltraTech)’s 1QFY2016 numbers have come in ahead of our estimates on the profitability front. Its net sales rose by 7.9% yoy to Rs6,097.5cr, aided by blended realization growth of 4% yoy and cement volumes growth of 3.8% yoy. However volume growth was below our estimated growth of 5.4%, while realizations were in line with our estimates. The EBITDA increased by 14.3% yoy to Rs1,151.9cr and the same is above our estimate of Rs1,081.4cr. The EBITDA margin came in at 18.9%, which is also above our estimate of 17.4%, mainly backed by strong operational efficiency. On the bottom-line front, the PAT came in at Rs590.8cr, above our estimate of Rs543cr. EBITDA margin healthy at 18.9%: For 1QFY2016, UltraTech reported an EBITDA growth of 14.3% yoy at Rs1,151.9cr as against our estimate of Rs1,081.4cr. The operating cost/tonne increased by just 2.7% yoy to Rs4,074, led by a decline in power & fuel cost/tonne and other expenses/tonne by 12.4% and 4.5% on a yoy basis, respectively. The power cost declined by 9% yoy, mainly due to increase in pet coke consumption (pet coke consumption in total coal consumption increased to 68% during the quarter compared to 64% in 4QFY2015 and 43% in 1QFY2015). Other expenses declined by 1% yoy on account of lower maintenance costs. The EBITDA margin increased by 110bp yoy to 18.9% and is above our expectation of 17.4%. The blended EBITDA/tonne came in at Rs949, an increase of 10.2% yoy. Outlook and valuation: We expect UltraTech to post an18% CAGR in its top-line on back of new capacity expansion and healthy realization over FY2015-17. The company’s bottom-line is expected to grow at a CAGR of 40.5% yoy over the same period. At the current levels, the stock is trading at 12.7x EV/EBITDA and at EV/tonne of US$194 on FY2017E capacity. We have a Neutral rating on the stock with a fair price of Rs3,282 on 12.5x EV/EBIDTA and on EV/tonne of US$195 FY2017E (installed capacity).