UltraTech’s performance for the second quarter reflects the first financial results post the amalgamation of Samruddhi Cement Limited with the Company. The results include the performance of Samruddhi with effect from 1 July, 2010 which was the Appointed Date for the amalgamation. The results for the corresponding Quarter of FY10 have been re-casted to include Samruddhi’s performance for like-for-like comparison and are strictly not comparable with the corresponding period of the previous year.
Net Sales stood at INR3215 crore as compared to INR3,538 crores in the corresponding period of the previous year. Profit before Interest, Depreciation and Tax was INR476 crore while profit after tax was INR116 crore.
The company produced 8.61Mt of grey cement. The combined cement and clinker sales of grey cement was 9.1Mt.
Subdued demand on account of monsoons, capacity additions and falls in realizations, coupled with increased input costs has impaired the company’s performance. Prices of imported coal rose from US$76/t to US$ 110/t – significantly increasing the company’s energy cost. These factors have put UltraTech’s margins under pressure.
The company’s wholly owned subsidiary “UltraTech Cement Middle East Investments Limited” has completed the acquisition process of ETA Star Cement together with its operations in the UAE, Bahrain and Bangladesh. It has also acquired management control.
In terms of domestic cement demand, consumption is expected to grow around 10% on the back of a good monsoon and the government’s initiatives to boost rural demand, infrastructure and housing.
Meanwhile, JP Morgan downgraded UltraTech Cement to ’neutral’ from ’overweight’. There is little upside in the stock and the recent sharp price increase in cement in southern India will recede, the brokerage said in a note.