X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
UltraTech: PAT down 24% YoY in March qtr - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

UltraTech: PAT down 24% YoY in March qtr
Apr 27, 2015 | Updated on Apr 29, 2015

UltraTech Cement has announced its financial results for the fourth quarter of the financial year 2014-15 (4QFY15). During the quarter, the company's consolidated net sales increased by 5.4% YoY, while consolidated net profit reported a decline of 24% YoY. Here is our analysis of the results:

Performance summary
  • On a consolidated basis, sales rise by 5.4% YoY during the quarter.
  • Operating profits grow by 8.8% YoY as operating margins improve marginally from 19.4% in 4QFY14 to 20% in 4QFY15.
  • Other income decreases by 31% YoY during the quarter.
  • Interest expenses increase by 86.9% YoY.
  • Consolidated net profit decreases by 24% YoY during the quarter; net margins contract from 13.9% in 4QFY14 to 10.1% in 4QFY15.

Consolidated financial performance
(Rs m) 4QFY14 4QFY15 Change FY14 FY15 Change
Sales 61,856 65,182 5.4% 214,433 240,648 12.2%
Expenditure 49,871 52,145 4.6% 179,172 202,297 12.9%
Operating profit (EBDITA) 11,986 13,037 8.8% 35,261 38,351 8.8%
Operating profit margin (%) 19.4% 20.0%   16.4% 15.9%  
Other income 1,899 1,310 -31.0% 5,306 6,343 19.5%
Depreciation 3,009 3,062 1.8% 8,381 8,972 7.1%
Interest 855 1,597 86.9% 3,610 5,865 62.5%
Profit before tax 10,022 9,689 -3.3% 28,576 29,856 4.5%
Tax 1,403 3,120 122.4% 6,448 8,835 37.0%
Effective tax rate 14.0% 32.2%   22.6% 29.6%  
Profit after tax 8,619 6,569 -23.8% 22,128 21,021 -5.0%
Minority Interest (29) (3) -89.8% 68 38 -44.1%
Net profit 8,648 6,572 -24.0% 22,060 20,983 -4.9%
Net profit margin (%) 13.9% 10.1%   10.3% 8.7%  
No. of shares (m)       274.2 274.4  
Diluted earnings per share (Rs)*         76.5  
P/E ratio (x)*         34.7  
*trailing twelve-month earnings

What has driven performance in 4QFY15?
  • UltraTech Cement reported 5.4% YoY growth in consolidated net sales for the quarter ended March 2014. It appears that the rise in the topline has been driven by an improvement in realizations. In volume terms, there has been a decline as the consolidated domestic cement and clinker sales decreased by 3% YoY to 11.8 million tonnes during 4QFY15 as against 10.8 million tonnes in 4QFY14. It must be noted that the figures for the quarter include those of the Gujarat Units of Jaypee Cement Corporation Limited. As such, the financial performance of the March 2014 quarter is not strictly comparable with the corresponding quarter of the previous financial year.

  • Operating margins expanded from 19.4% in 4QFY14 to 20% in 4QFY15 mainly on account of lower power and fuel expenses.

    Operating Cost Break-up
    (Rs m) 4QFY14 4QFY15 Change
    Cost of raw materials 9,274 9,842  
    Change in inventory 563 231  
    Purchases of stock-in-trade 1,008 1,086  
    Total Raw Materials 10,845 11,158 2.9%
    % of net sales 17.5% 17.1%  
    Employee expenses 2,567 3,502 36.4%
    % of net sales 4.1% 5.4%  
    Power & fuel 12,966 12,692 -2.1%
    % of net sales 21.0% 19.5%  
    Freight & forwarding expenses 13,683 14,718 7.6%
    % of net sales 22.1% 22.6%  
    Other expenses 9,809 10,075 2.7%
    % of net sales 15.9% 15.5%  
    Total operating expenses 49,871 52,145 4.6%
    % of net sales 80.6% 80.0%  

  • The other income (including other operating income) dropped by 31% YoY during the quarter.

  • On account of a sharp jump in finance costs and higher effective tax rate, the consolidated net profits declined by 24% YoY. The net profit margin contracted from 13.9% in 4QFY14 to 10.1% in 4QFY15.
What to expect?
The January-March quarter is typically the main construction season. As such, UltraTech's muted performance during the quarter reflects the overall slowdown in housing demand and low infrastructure spending. The cement sector capacity utilization rate is estimated to have been around 67% during the quarter.

During the full financial year 2014-15, the achieved capacity utilization rate of 75% as against an estimated 68% for the entire cement sector.

The short to medium term outlook for cement demand appears challenging owing to excess cement capacity of roughly 120 million tonnes. As per the company's management, annual cement demand in India stands around 255-260 million tonnes as against total cement capacity of around 390 million tonnes. However, with the overall macroeconomic indicators showing signs of improvement, cement demand is expected to revive over the medium to long term. Moreover, easing commodity prices and lower interest rates should augur well for cement demand in India.

Post acquisition of the Gujarat cement units and commission of new cement capacities, the company's domestic cement capacity stands at 60.2 million tonnes per annum. It is also in the process of acquiring two cement plants of 4.9 million tonnes capacity in Madhya Pradesh. The acquisition is expected to be completed in the third quarter of the ongoing financial year.

The company's board of directors has recommended a dividend of Rs 9 per share of face value Rs 10 each. This translates into a dividend payout worth 15% of the company's net profits.

At the current stock price level the stock is trading at nearly 34.7 times its trailing twelve month consolidated earnings. At this level, the stock is above the upper valuation band that we assign to it. As such, we continue to maintain a SELL view on the stock.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

ULTRATECH CEMENT SHARE PRICE


Dec 15, 2017 (Close)

TRACK ULTRATECH CEMENT

  • Track your investment in ULTRATECH CEMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON ULTRATECH CEMENT

ULTRATECH CEMENT - HOLCIM COMPARISON

COMPARE ULTRATECH CEMENT WITH

MARKET STATS