Dolat Capital's research report on UltraTech Cement
Revenue was in line, however EBITDA, EBITDA/tn and APAT above estimates. UTCEM posted 33.1% YoY de-growth in revenue to Rs76.3 bn due to 31.4% YoY volume decline to 14.7 mt coupled with 2.4% YoY decline (+4.0% QoQ) in realization to Rs5,211/tn. EBITDA/ APAT down 29.7%/ 25.5% YoY to Rs20.7 bn/ Rs9.5 bn. We expect 2.2%/ 5.2%/ 12.8% revenue/ EBITDA/ APAT CAGR over FY20-22E led by -10.9%/ 15.0% volume growth and 1.0%/ 1.0% realization growth in FY21E/ FY22E. We increase our revenue estimates by 7.0%/ 2.5% for FY21E/ FY22E. We increase our EBITDA margin estimates by 315/ 225 bps to 23.0%/ 23.3% for FY21E/ FY22E to factor Q1FY21 results. Accordingly, upgrade our APAT estimates by 55.6%/ 22.1% for FY21E/ FY22E. UTCEM will continue to witness healthy operating cash flow (average Rs74.0 bn/year) and free cash flow (average Rs53.0 bn/year) leading to further deleveraging (Net D:E of 0.19x in FY22E vs. 0.42x FY20).
UTCEM, being the largest player in Indian cement industry is its biggest advantage. Thus, we upgrade to Buy with a TP of Rs5,053 based on 15x (8% discount to 3-5 year averages) consolidated FY22E EV/EBITDA.
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