UltraTech Cement falls on Citigroup sell report

UltraTech Cement declined in early trade on Tuesday after Citigroup recommended a sell on the stock with a target price of Rs 1,620.

As producers' pricing power weakens, Citi expects the EBITDA per tonne to contract Rs 1,015 in FY14. "Valuation wise, the enterprise value per tonne at USD 170 does not appear cheap," the firm reasoned.

Company's profit after tax fell by 16.2 percent - slightly better-than-expected - year-on-year to Rs 726.2 crore in fourth quarter, helped by margins and lower interest cost.

Interest dropped 18.4 percent YoY to Rs 47.8 crore. However, other income went down by 30.7 percent to Rs 100.5 crore and Effective tax rate stood at 35.2 percent in Jan-Mar quarter of 2013 as against 26 percent in a year ago period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margin declined to 22.25 percent versus 23.78 percent YoY.

Topline missed expectations as overall volumes came in down 3.6 percent at 11.3mt, though blended realizations increased by 4.8 percent YoY.

Net sales went up by 1 percent YoY to Rs 5,389.2 crore during the same period.

The Economic Times reported that Ultratech Cement is in final talks to buy Jaypee’s two Gujarat plants for enterprise value of Rs 4100 crore.

At 10:03 hours IST, the stock was down 0.46 percent to Rs 1,870.10 on Bombay Stock Exchange.
 
In the previous trading session, the share closed down 2.52 percent or Rs 48.60 at Rs 1,878.75.