Ultratech Cement Q4 net sales likely to grow by 18% YoY

Ultratech Cement , country's largest cement company by market cap is expected to report profit after tax of Rs 691 crore in the fourth quarter of FY12, a fall of 4.9% as compared to Rs 726.8 crore in a year ago period, according to CNBC-TV18 poll.

In the fourth quarter of financial year 2010-11, PAT was boasted by the reversal of Rs 115 crore owing to excess tax provision. If we exclude the same amount, then the profit after tax is likely to grow by 13% YoY.

Net sales are seen going up by 17.8% to Rs 5,290 crore from Rs 4,490.1 crore during the same period.      

EBITDA is expected to increase by 15.6% to Rs 1,179 crore in the January-March quarter FY12 from Rs 1,020.2 crore in the corresponding quarter of last fiscal.          

EBITDA margin is seen declining at 22.3% versus 22.72% year-on-year.

Seasonally strong volumes:

Dispatches during the quarter stood at 11.2mt up 7%(YoY)

Expectations

Ultratech Cements topline will be driven by price increases that will outweigh cost pressures

Though east India was a bit tepid, demand growth across regions was seasonally strong

UltraTech is a key beneficiary from recent price increases across south-west and east India owing to its PAN India presence

Price increases were undertaken across regions; Pan-India cement prices in the quarter averaged Rs 276/bag, up 6% YoY and 4% QoQ

It will get further boasted by the pick up in demand from the Maharashtra-Gujarat region

All-India average cement prices, after declining towards the end of Q3FY12, remained firm on an average in January and increased by Rs 10-15/bag in February

Price hikes for Q4FY12 gathered momentum only in the month of March, 2012 and increased on an average by Rs 10-25/bag as an after effect of the recent rail and Union Budget proposals

Costs likely to be stable versus 3Q FY12, leading to marginally better margins (QoQ) driven by higher cement prices:
-Higher realizations and positive operating leverage will dilute the impact of cost inflation though expect the margins to be relatively flattish YoY
-Effective hike in rail freight will reflect partially in this quarter
-However, on QoQ basis effect of only increased base freight rate is expected to be evidenced
-Though realizations will be higher, the sharp increase in energy and freight cost will contribute to the escalation in the cost of production

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