Angel Broking neutral on UltraTech Cement

Angel Broking neutral on UltraTech Cement
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.
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