18 October 2014
2QFY15 Results Update | Sector:
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)/(USD b) 637.3/10.4
Financials & Valuation (INR Billion)
EPS Gr. (%)
2015E 2016E 2017E
BV/Sh (INR) 709.7
Grey Cement revenue beat est, RMC, White cement in line:
from recently acquired Gujarat (JPA) plant, Ultratech’s (UTCEM) 2QFY15 net sales
grew 19.5%YoY (-5% QoQ) to INR53.8b (v/s est of INR51.9b). Grey Cement
revenue 22%YoY (beat est of 17% YoY), while RMC and White cement were in line.
Volume at par, realizations stronger:
Grey Cement volume grew 12% YoY (-12%
QoQ) at 10.35mt v/s est of 10.25mt, while realizations stood at INR4,316 (+8.7%
YoY, +4.8% QoQ), ahead of estimates of INR4,177/ton. White cement (incl. Putty)
volume grew just 2.7% YoY (v/s est of 9.1%YoY) to 0.302mt, while RMC volume
disappoints with de-growth of 2.6%YoY (v/s est of 9.8% YoY growth)
EBITDA in line as cost push negates realization uptick:
EBITDA grew 26% YoY
(-18% QoQ) to INR 8.3b (v/s est INR8.2b). Blended EBITDA/ton stood in line with
est. at INR790 (+INR87 YoY, -INR62 QoQ). Higher realizations was negated by cost
push (+INR412/ton QoQ), led by (1) higher energy cost owing to pet coke price
increase, (2) higher RM cost due to rise in input materials and increase in royalty
on limestone, and (3) higher freight cost due to seasonality. High other income
and lower tax rate boost PAT to INR4.1b (+55.3% YoY) v/s est of INR3.2b.
Guidance of 8% industry growth:
Management guided for demand growth of
~8%, with required renewed government focus on housing and infrastructure.
Raising FY15/16 EPS by 10%/3%, maintain Buy:
We are raising FY15/16 EPS by
10%/3.4% respectively to factor in higher FY15 realization growth of INR20/bag
YoY (v/s earlier est of INR15/bag), which was partially moderated by assumptions
of higher freight and energy cost, lower white cement and RMC volumes. The
stock trades at FY16E EV/EBITDA of 9.4x and EV/ton of USD 157/ton. Maintain
target price of INR3,216 (USD200/ton, implied FY16E EV/EBITDA of 13x).
(Jinesh@MotilalOswal.com); +91 22 3982 5416
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.