Dear All,
Forwarding you the Result Flash on UltraTech for 4QFY2011 with a Neutral recommendation
Strong improvement in realizations leads to stellar bottom-line performance
During 4QFY2011 UltraTech’s like-for-like net sales (considering Samruddhi merger) rose 6.8% yoy primarily on account of higher realizations. The realizations improved by 6.3% yoy to `3,828/tonne. The realizations were higher in the quarter on account of the price hikes carried out by the cement manufacturers across the country to the tune of `30-40 per bag. The company’s like-for-like domestic dispatches for the quarter (incl clinker sales) stood at 10.37 mn tonnes, up by a marginal 0.7% yoy. On a qoq basis, the net sales were higher by a robust 20.9% on account of 13.2% growth in dispatches coupled with a 7.7% improvement in realizations. The growth in dispatches was aided by a pick-up in the demand across the country during the quarter. However, the company faced margin pressure during the quarter on account of increase in the power and fuel, freight costs and raw material costs. During the quarter, UltraTech’s variable costs rose by 14%. The domestic coal prices rose by 30% in March 2011 and imported coal prices rose by 27% yoy. The higher input costs neutralized the improvement in realizations to a considerable extent. The OPM for the quarter stood at 24.2% up 459bp on qoq basis. On the bottom-line front, the company’s net profit stood at `727cr, up 127.9% on qoq basis. We continue to remain neutral on the stock as it is fairly priced.
Exhibit 1: 4QFY2011 Performance (Standalone)
| Y/E March (` cr) | 4QFY2011 | 3QFY2011 | % Chg qoq | 4QFY2010 | % Chg yoy | FY2011 | FY2010 | % Chg |
| Net Sales | 4,490 | 3,715 | 20.9 | 1,909 | 135.2 | 13,210 | 7,050 | 87.4 |
| Other operating Income | 66 | 26 | | 13 | | 141 | 63 | |
| Total Operating Income | 4,556 | 3,741 | 21.8 | 1,923 | 137.0 | 13,351 | 7,113 | 87.6 |
| Net raw-material costs | 632 | 514 | 22.9 | 361 | 74.9 | 1,866 | 1,027 | 81.7 |
| (% of sales) | 14.1 | 13.7 | | 18.9 | | 14.1 | 14.6 | |
| Power & fuel | 966 | 896 | 7.8 | 365 | 164.5 | 3,123 | 1,430 | 118.3 |
| (% of sales) | 21.5 | 23.9 | | 19.1 | | 23.6 | 20.3 | |
| Staff costs | 217 | 188 | 15.6 | 66 | 228.6 | 667 | 253 | 163.5 |
| (% of sales) | 4.8 | 5.0 | | 1.5 | | 5.0 | 3.6 | |
| Freight & forwarding | 821 | 728 | 12.6 | 349 | 135.4 | 2,558 |
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