UltraTech Cement Posts Decent Numbers For September Quarter
DSIJ Intelligence / 25 Oct 2012
UltraTech Cement, one of India’s largest cement producing companies, has reported decent numbers for the September quarter. The net sale of the company has increased by 18.8 per cent on a YoY basis while the net profit has jumped by 97.2 per cent to Rs 550.03 crore.
UltraTech Cement, one of India’s largest cement producing companies, has reported decent numbers for the September quarter. The net sale of the company has increased by 18.8 per cent on a YoY basis while the net profit has jumped by 97.2 per cent to Rs 550.03 crore. As mentioned earlier, the cement companies have largely reported strong YoY numbers on the back of the low base effect and a steep increase in the realisation during the quarter. Realisations were up by 17.2 per cent on a YoY basis and 2.3 per cent on a QoQ basis to Rs 5,217 per tonne. Even dispatches were marginally up by 1.3 per cent on a YoY basis. The lower-than-expected fall in the cement prices due to the delayed monsoon helped the company to report strong topline and bottomline numbers.
| UltraTech Cement | |||||
|---|---|---|---|---|---|
| Particulars | Sep ' 12 | Sep ' 11 | YoY | Jun ' 12 | QoQ |
| Sales | 4727.42 | 3980.62 | 18.8 | 5090.86 | -7.1 |
| Sales Volume (Cement) | 9.06 | 8.94 | 1.3 | 10.8 | -16.1 |
| Realisation | 5217.9 | 4452.6 | 17.2 | 4713.8 | 10.7 |
| EBITDA | 1076 | 684 | 57.3 | 1300 | -17.2 |
| EBITDA Margin | 22.8 | 17.2 | 5.6 | 25.5 | -10.9 |
| EBITDA/Tonne | 1187.6 | 765.1 | 55.2 | 1203.7 | -1.3 |
On the operating side, despite the hike in the input cost of raw material (up by 22 per cent YoY), power & fuel (up by 12.5 per cent YoY) and an increase in the freight charges (up by 14 per cent YoY), the company has been able to improve its EBITDA margin by 560 bps to 22.8 per cent on a YoY basis. The overall cost per tonne increased by 10.3 per cent YoY and 8 per cent QoQ due to a surge in the power & fuel cost and staff-related expenses. The power & fuel cost increased due to a change in the fuel mix and firm coal prices in the open market.
The EBITDA per tonne for the quarter stood at Rs 1187/tonne up by 55.2 per cent YoY. The cement price stood at an average of Rs 270-290 per 50 kg bag during the quarter compared to Rs 240 per 50 kg bag that was hovering last year same quarter which resulted into higher realisation on a YoY basis. However, it came down from the average Rs 300 level per 50 kg bag that was achieved during the quarter ending June.
As for the outlook, the company has stated that the cement industry is likely to grow by over 8 per cent linked to the government’s focus on infrastructure development. The surplus scenario is likely to continue for the next three years. Moreover, the continuing rise in input costs will adversely impact the margins.
In conclusion, we believe that with the withdrawal of monsoon the demand in the coming quarter will remain strong and this will lead to higher sales volume. Moreover, due to higher cement demand the prices will also move in the upward direction. However, higher input costs and high freight charges will put some margin pressure too. Overall the scenario looks pretty good for the cement companies in the next couple of quarters.
Capex Plan On Track
The company’s cement grinding unit of 1 million tonne in Gujarat is expected to come on stream by the end of November 2012. Two integrated plants with aggregated capacity of 10.2 million tonnes at Chattisgarh and Karnataka are expected to go on stream by the end of First half of FY14. Thus in the next one year the capacity of the company will increase by approximately 19 per cent.
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