Dolat Capital Market's research report on UltraTech Cement
UTCEM reported results above estimates on all fronts. UTCEM posted 7.7% YoY growth in revenue to Rs103.5 bn led by 7.6% YoY volume growth to 20.1 mt coupled with 0.1% YoY increase (-0.9% QoQ) in realization to Rs5,162/tn. EBITDA/ APAT up 40.5%/ 113.1% YoY to Rs26.9 bn/ Rs12.3 bn. We expect 4.6%/ 7.9%/ 15.6% revenue/ EBITDA/ APAT CAGR over FY20-23E led by -2.9%/ 7.9%/ 5.7% volume growth and 1.3%/ 1.0%/ 1.0% realization growth in FY21E/ FY22E/ FY23E. We increase our revenue/ EBITDA margin/ APAT estimates by 9.3%/ 159 bps/ 26.5% for FY21E factoring H1FY21 results. We broadly maintain FY22E estimates and introduce FY23E. UTCEM will continue to witness healthy operating cash flow (average Rs84.3 bn/year) and free cash flow (average Rs57.0 bn/year) leading to further deleveraging (Net D:E of 0.0.7x in FY23E vs. 0.42x FY20). UTCEM, being the largest player in Indian cement industry is its biggest advantage.
Thus, we maintain Buy with an upward revised TP of Rs5,736 based on 15x (5% discount to 5-year average) consolidated Sept’22E EV/EBITDA.
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