UltraTech Cement: Soft Paw
Vinaya Patil / 23 Apr 2013
While the company posted a disappointing set of numbers with regard to Q4FY13, its FY13 performance was moderate.
The stock of UltraTech was down by 2.52% yesterday (April 22) despite the broader market being up by almost 1%. The reason for such downfall was a bad set of numbers that the company posted for its fourth quarter of FY13. The total operating income was marginally up by 2% on a yearly basis. UltraTech posted a total income of Rs 5472 crore for Q4FY13 against Rs 5384 crore it posted for the same quarter last year.
The low growth in sales was primarily due to flat sales of clinker and cement at 11.13 MMT for the quarter and the decline in white cement sales to 1.56 LMT from 1.63 LMT. In addition to this, cement prices increased marginally and on an average it was just 3-5% on a yearly basis.
However, a major disappointment was seen in its bottomline which declined by 16% on a yearly basis. The net profit recorded for Q4FY13 was Rs 726.2 crore. The reason for such a decline in the profit can be attributed to an increase in the total expenses which increased from 79.8% of sales at the end of Q4FY12 to 81.1% of sales for the last quarter. The rise in the total expenses was largely driven by an increase in raw material cost (14%) on a yearly basis and an increase in freight expenses by 10%.
The net profit would have been worse if the interest cost had not declined. The interest cost has declined by 19% on a yearly basis, largely due to reduction in long-term borrowings.
With respect to the company’s FY13 numbers, the total sales stood at Rs 20018 crore up from Rs 18158 crore posted in FY12. The company recorded total sales of clinker & cement and white cement to 40.7 MMT and 5.7 LMT (5.6LMT) respectively. The net profit during the year increased by 9% to Rs 2655 crore. Currently, the total cement capacity of the company is 48.75 MMT and is going to increase to 50.9 MMT in the next couple of years. The company also announced a dividend of Rs 9 per share giving a yield of a mere 0.5%.
The stock of the company is currently discounting its FY13 earnings by 19.4 times, which looks expensive considering the current performance and we therefore expect the prices to remain under pressure in today’s (April 23) trade too.
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