Axis Direct's research report on Ultratech Cement
UltraTech reported an EBITDA/ton of more than Rs 1,000 in Q2FY17, which is commendable, given Q2 is a seasonally weak quarter for cement industry due to monsoon. This is the highest EBITDA/ton for September quarter in past four years. Firm cement prices across regions despite low off-take (volume growth of only 1% YoY) was the key reason for higher profitability.
Standalone EBITDA at Rs 11.5 bn (up 17% YoY) was in line with consensus and our estimates. Blended EBITDA/ton was Rs 1,030 (vs. Rs 890 in Q2FY16 and Rs 1,080 in Q1FY17). Average realization improved 3% QoQ to Rs 4,880/ton due to cement price hikes in North/South regions. Volumes at domestic operations were 11.2 mnt (up 1% YoY). Cost/ton increased 6% QoQ due to higher cost of pet-coke and negative operating leverage because of lower sales.
We maintain our EPS estimate for FY17/18 at Rs 126/170 with a target price of Rs 4,420 (10% upside from CMP of Rs 4,009).For all recommendations, click here
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