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UltraTech: Ramping Up Efficiencies for the Acquired Plants - Views on News from Equitymaster
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  • Nov 11, 2017 - UltraTech: Ramping Up Efficiencies for the Acquired Plants

UltraTech: Ramping Up Efficiencies for the Acquired Plants
Nov 11, 2017

UltraTech Cement has announced its results for the second quarter of the financial year 2017-18 (2QFY18). During the quarter, the company's consolidated gross sales increased by 20.2% YoY, while net profit decreased by 31.2% YoY. Here is our analysis of the results:

Performance summary
  • On a consolidated basis, gross sales increased by 20.2% YoY during the quarter.
  • Total domestic sales volume stood at 12.41 million metric tonnes (MnT), up by 18% from 10.55 MnT seen during the corresponding quarter last year.
  • Operating profits grew by 14.4% YoY during the quarter. Operating profit margins witnessed a decline and stood at 20.1% in 2QFY18 as against 21.1% in 2QFY17.
  • The biggest cost escalation during the quarter was seen in pet coke prices, which went up around 70% YoY. However, through alternative fuel use, improved captive power plant efficiency, and enhanced share of waste heat recovery, the rise in the energy cost per tonne was restricted to 26% YoY.
  • Depreciation charges and finance costs increased by 56.1% YoY and 160% YoY, respectively, owing to the newly acquired JPA assets.
  • Other income decreased 2.3% YoY during the quarter.
  • As a result, the consolidated net profit decreased by 31.2% YoY during the quarter.
  • Net profit margins during the quarter decreased from 10.6% in 2QFY17 to 6.1% in 2QFY18.

    Consolidated Financial Performance Snapshot
    (Rs m) 2QFY17 2QFY18 Change 1HFY17 1HFY18 Change
    Gross Sales 57,706 69,361 20.2% 139,610 148,646 6.5%
    Expenditure 45,519 55,416 21.7% 112,669 118,379 5.1%
    Operating profit (EBITDA) 12,187 13,946 14.4% 26,940 30,268 12.4%
    Operating profit margin (%) 21.1% 20.1%   19.3% 20.4%  
    Other income 1,589 1,552 -2.3% 3,099 3,212 3.7%
    Depreciation 3,342 5,216 56.1% 6,570 8,513 29.6%
    Finance costs 1,496 3,883 159.6% 3,294 5,291 60.6%
    Profit before exceptional items, Share in Profit of Associate and JV (net of tax) 8,938 6,399 -28.4% 20,176 19,675 -2.5%
    Exceptional items 0 0.4   0 -314  
    Share in Profit of Associate and JV (net of tax) 0.1 0.0   0.1 0.1  
    Profit before Tax 8,938 6,399 -28.4% 20,176 19,361 -4.0%
    Tax 2,801 2,162 -22.8% 6,241 6,144 -1.5%
    Effective tax rate 31.3% 33.8%   30.9% 31.7%  
    Profit after tax 6,136 4,238 -30.9% 13,935 13,217 -5.2%
    Non-controlling Interest -7 10   -9 19  
    Net profit 6,143 4,228 -31.2% 13,944 13,198 -5.4%
    Net profit margin (%) 10.6% 6.1%   10.0% 8.9%  
    No. of shares (m)         274.5  
    Diluted earnings per share (Rs)*         96.2  
    P/E ratio (x)*         46.2  

    *trailing twelve-month earnings

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