UltraTech Cement Q4 Review - Results Beats Expectation; Outlook Remains Robust: Systematix

Systematix Research Report

Ultratech Cement Ltd. reported a strong set of numbers with revenue /Ebitda/profit after tax/volume exceeding estimates. Revenue went up by 9.4% YoY (22.0% QoQ) to Rs 204.2 billion - in line with our estimate of 201.4 billion, driven by robust volumes and healthy realisations. Volume was up by 10.7% YoY (28.4% QoQ) to 35.1 million tonnes per annum (versus our estimate of 34.2 mtpa).

Blended Realisation/tonne declined by 1.1% YoY and 5.0% QoQ to Rs 5,821. This was a testament to UltraTech Cement’s price resilience relative to other cement players who witnessed sharper falls in realisations.

Ebitda was up 23.8% YoY (+26.4% QoQ) to Rs 41.1 billion and blended Ebitda/tonne rose 11.9% YoY to Rs. 1,173 largely due to lower power and fuel expenses. Raw Material cost/tonne inched up yet another quarter for the industry and Ultratech due to higher fly ash and slag costs.

Adjusted profit after tax was up 35.6% YoY (27.4% QoQ) to Rs 22.6 billion, versus our estimate of Rs 20.0 billion. Trade Volumes improved to 65% of rural sales. Clinker Conversion ratio improved to 1.44 times from 1.42 in Q4 FY23 while lead distance reduced to 400 kms in Q4 FY24 versus 413 kms in Q4 FY23.

During the quarter, the company commissioned cement capacity of 7.8 mtpa, taking total grey cement capacity of the company to 140.8 mtpa in India and 146.2 mtpa overall.

We forecast a strong 16%/20%/24% CAGR in revenue/Ebitda/PAT over FY24-26E on the back of a 15% CAGR in grey cement sales volume combined with more headroom for cost optimisation.

Factoring in a higher net debt on account of Kesoram acquisition, we revise our target price to Rs 11,440 from earlier Rs 12,000 based on 18 times FY26E EV/Ebitda. We maintain Buy on the stock.

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