Ul­traT­ech Ce­ment Ltd

Money Times - - Best Bet Stock Watch -

(BSE Code: 532538) (CMP: Rs.3384.45) (FV: Rs.10) (TGT: Rs.3850+)

In­cor­po­rated in 2000, Mum­bai based Ul­traT­ech Ce­ment Ltd (UCL) is a sub­sidiary of Grasim In­dus­tries that man­u­fac­tures and sells ce­ment and ce­ment re­lated prod­ucts. It of­fers Or­di­nary Port­land Ce­ment (OPC), Port­land Blast-Fur­nace Slag Ce­ment, Port­land Poz­zolana Ce­ment (PPC), White Ce­ment and White Ce­ment based prod­ucts; ready mix con­crete (RMC); and build­ing prod­ucts con­sist­ing AAC blocks, joint­ing mor­tars, etc. It also pro­vides Su­per Stucco, a self-cur­ing no-wa­ter­cur­ing plas­ter; Power Grout, a self-cur­ing in­dus­trial grout for an­chor­ing/grout­ing ap­pli­ca­tions; Seal and Dry Wa­ter Proof­ing Sys­tems; C'retePro, a liq­uid sys­tem for mor­tar and con­crete mod­i­fier; and re­pair mor­tars and con­crete un­der the names ‘Basekrete’ and ‘Mi­crokrete’. In ad­di­tion, it of­fers con­struc­tion prod­ucts and value-added ser­vices like tech­ni­cal ad­vice dur­ing con­struc­tion, vaastu con­sul­tancy, prod­uct train­ing in var­i­ous cat­e­gories, etc. It ex­ports to UAE, Bahrain, Bangladesh and Sri Lanka.

UCL re­ported a be­low par op­er­at­ing per­for­mance in Q2FY19 with 7% lower EBITDA at Rs.11700 mil­lion v/s our es­ti­mate of Rs.12200 mil­lion. Re­ported EBITDA/tonne was Rs.744 v/s Rs.958 and Rs.825 in Q2FY18 and Q1FY19 re­spec­tively. How­ever, a higher-than-ex­pected av­er­age re­al­i­sa­tion is a pos­i­tive sur­prise as NSR (ce­ment) im­proved by ~2% QoQ to Rs.4423/tonne. Sales vol­ume stood at 15.7 mil­lion tonnes (+19.5% YoY and -10% QoQ). While op­er­at­ing

cost/tonne rose 7% YoY and 6% QoQ to Rs.4181, in­put cost/tonne too grew 14% YoY and 5% QoQ to Rs.1946, mainly led by higher power con­sump­tion due to main­te­nance shut­down, INR de­pre­ci­a­tion and higher cus­tom duty on pet-coke along with higher pet-coke prices. Main­te­nance cost and main­te­nance-led shut­down re­sulted in in­cre­men­tal cost of Rs.100/tonne QoQ, which we expect to con­trib­ute to ab­so­lute EBITDA in H2FY19E. How­ever, we cut our EBITDA es­ti­mate by 9%/8% for FY19E/FY20E mainly to fac­tor in higher cost. Dur­ing the quar­ter, its rev­enues grew ~21% YoY to Rs.77300 mil­lion, mainly led by higher sales vol­ume. No­tably, sus­tained de­mand en­vi­ron­ment, es­pe­cially from the non-trade seg­ment, led to strong sales vol­ume. Non-trade sales vol­ume grew 40% YoY while trade sales vol­ume grew 11% YoY. White ce­ment (in­clud­ing wall putty) sales vol­ume stood at 0.32 mil­lion tonnes with rev­enue of Rs.4500 mil­lion. RMC rev­enue came in at Rs.4800 mil­lion.

A per­sis­tent rise in cost pres­sure, led by higher fuel and in­put prices con­tin­ued to ham­per UCL’s op­er­at­ing per­for­mance. Op­er­at­ing cost/tonne rose 6% QoQ, mainly due to 20% and 5.4% se­quen­tial rise in other ex­pen­di­tures/tonne and in­put cost/tonne re­spec­tively. No­tably, Power & Fuel cost/tonne rose sharply by 12.5% QoQ (+18% YoY). How­ever, lo­gis­tics cost/tonne de­clined ~3% QoQ, led by re­duc­tion in lead dis­tance and ab­sence of rail­way sur­charge.

Tech­ni­cal Out­look: The stock looks good on the daily chart for medium-term in­vest­ment. It cur­rently trades near its 200 DMA level on the monthly chart and has taken sup­port of the up­trend line on the weekly chart. Start ac­cu­mu­lat­ing at this level of Rs.3384.45 and on dips to Rs.3184 for medium-to-long term in­vest­ment and a pos­si­ble price tar­get of Rs.3850+ in the next 12 months.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.