Ultratech Cement (UTCEM) Q3FY21 revenue increased by 18% YoY to Rs 123 billion is led by volume and realization. Absolute EBITDA increased by 57% YoY to Rs 31 billion. Cost inflation was visible on QoQ basis, as Opex/t increased by 1% QoQ. EBITDA/t increased to Rs 1356 vs Rs 986 YoY but was down QoQ by Rs 47/t.Driven by healthy CF, Consolidated net debt declined to Rs 94 billion down by Rs 27 billion QoQ. We understand deleveraging to continue despite capex for 19mt capacity. Net debt/EBITDA reduced to 0.7x which was 1.9x YoY.
In Dec-20 UTCEM has guided to add 19.5mt of capacity in the next 3 years (this includes 12.8mt of new expansion plans). Capacity in east region will increase by 10mt, central by 5mt, West/North by 1.8mt/2.5mt. UTCEM has guided by FY23E its total cement capacity will increase to 136mt (up by ~20% vs FY20 capacity).
Commenting on the result review, broking firm IDBI Capital said, "Ultratech Cement Q3FY21 EBITDA came higher than our / consensus estimate by 9% / 14%. Beat is driven by volume, as we modelled volume growth of 5% vs. reported at 14% YoY. Cement demand until H1FY21 was driven by rural India, and from Q3FY21 UTCEM has witnessed demand in Urban housing market too. Region wise, its plant in East operated at 100% utilization, followed up by North, Central and West at 80%+ and South at 70%. Though, EBITDA/t was down by 3% QoQ driven by inflation in the energy prices."
"We factored better than expected result in our full year numbers. This has resulted in increase in the EBITDA by 5-6% over FY21-23E. Revised TP is Rs 5,744 (earlier Rs 5,423) based on unchanged 13x FY23E EV/EBITDA multiple (which is at +1STD of its last 10 years mean)," it said.
IDBI Capital likes UTCEM business which has Numero Uno brand, pan India presence in Indian cement market and its balance sheet is getting lean. "However, due to uptick in the stock price in the last 1 month we lower our rating by one notch to Hold."
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