Angel Broking neutral on UltraTech Cement

Angel Broking neutral on UltraTech Cement
Published: 06 May 2011

Angel Broking has maintained neutral rating on UltraTech Cement (ULTC), in its May 4, 2011 research report.

“UltraTech Cement (ULTC) posted robust 127.9% QoQ growth in bottom line to INR727 crore for 4QFY2011, aided by ~13.5% growth in dispatches coupled with a 7.7% improvement in realisation. The company’s domestic dispatches for the quarter stood at 10.37mn tonnes. Further, the bottom line during the quarter was boosted by one-off INR115 crore of tax reversal during the quarter. We remain Neutral on the stock.”

“For 4QFY2011, ULTC’s net sales rose by robust 20.9% QoQ INR4490 crore on the back of higher dispatches and better realisation. Growth in dispatches was aided by a pick-up in demand across the country during the quarter. However, ULTC faced margin pressure during the quarter due to higher power and fuel, freight and raw-material costs. Higher input costs neutralised the improvement in realisation to a considerable extent. OPM for the quarter stood at 24.2%, up 460bp QoQ. On a like-for-like basis, net sales rose by 6.8% YoY, while PBIT rose by 5.4% YoY.”

“We expect ULTC to post a 25.0% CAGR in its top line over FY2011-13, aided by higher volumes (also FY2011 financials included only nine months of Samruddhi’s operations). At current levels, the stock is trading at an EV/EBITDA of 6.4x and EV/tonne of USD 126 on FY2013 estimates, which we believe is fair. Hence, we maintain our Neutral recommendation on the stock,” says Angel Broking research report.