20 October 2012
2QFY13 Results Update | Sector: Cement
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
* Merger of Grasim's cement business assumed w.e.f 1 July 2010
UltraTech Cement's 2QFY13 performance is above estimates with EBITDA/ton of INR1,069 (v/s est INR1,000/ton),
driven by higher than estimated realizations, benefit of which was diluted by higher than estimated cost-push.
However, lower other income restricted PAT to INR5.5b (v/s est INR5.49b) - a growth of 97% YoY (-29% QoQ).
Volumes at 9.29mt (+0.7% YoY, -10% QoQ v/s est 9.35mt). Blended realization's (incl RMC & white cement) at
INR5,059/ton (+3% QoQ v/s est INR4,823/ton). Grey cement realizations is estimated to improve ~2% QoQ
(~20% YoY) to INR4,203/ton (v/s est INR3,984/ton).
Sales at INR47b (v/s est INR45b) and PAT at INR5.5b (v/s est INR5.49b).
EBITDA at INR10b (v/s est INR9.5b), translating into EBITDA margins of 21.4% (-410bp QoQ, +650bp YoY; v/s est
21%) and EBITDA/ton of INR1,069 (v/s est INR1,000/ton), driven by higher realizations. However, cost push in
form of energy cost (+4.7% QoQ) and other expenses (+28% QoQ) due to maintenance related cost diluted
benefit of higher realizations.
Its 1.2mt grinding unit at Gujarat plant is expected to start operations in 3QFY13, which will enable it to grind
excess clinker, thereby improving mix in favor of cement.
"The cement industry is likely to grow over 8% linked to the Government's focus on infrastructure
development. The surplus scenario is likely to continue for the next three years."
Valuation and view:
We are upgrading our FY13/14 EPS estimates by 7%/8% to INR116.8/132.6, to factor in for
higher than estimated cement realizations, lower volumes and higher cost. The stock trades at 15.2x FY14E EPS,
8.8x EV/EBITDA and USD170/ton. Maintain
with target price of INR2,050 (9x FY14E EV/EBITDA).
(Jinesh@MotilalOswal.com) + 91 22 3982 5416
(Sandipan.Pal@MotilalOswal.com); +9122 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.