Angel Broking maintains neutral rating on UltraTech

Angel Broking maintains neutral rating on UltraTech
03 August 2011

Angel Broking has maintained neutral rating on UltraTech Cement of India, in its July 28, 2011 research report.

"UltraTech Cement (ULTC) posted robust 22.5% yoy growth in its bottom line to Rs 683cr (for 1QFY2012), aided by an ~11% improvement in blended realisation to Rs 4,503/tonne. The company’s domestic dispatches of grey cement (incl. clinker) stood at 9.46Mt, down 1.6% YoY.

For 4QFY2011, ULTC’s net sales rose by robust 9.4% YoY to INR4,365cr on the back of an impressive ~11% improvement in blended realisation to INR4503/t. The company’s realisation was higher by 6.7% even on a sequential basis and turned out to be a major positive surprise.

 The company faced margin pressure during the quarter on account of increased power and fuel and freight costs. Despite the cost pressures, OPM for the quarter was higher by 218bp YoY and stood at 27.9% on account of better realisation. The company’s net profit stood at INR683cr, up 22.5% YoY, well ahead of our as well as consensus estimates."

"We expect ULTC to post a 22.6% CAGR in its top line over FY2011-13, aided by higher volumes (FY2011 financials include only nine months of Samruddhi’s operations). At current levels, the stock is trading at an EV/EBITDA of 6.1x and EV/t of US$125 on FY2013 estimates, which we believe is fair. Hence, we maintain our Neutral recommendation on the stock, says Angel Broking research report.
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