Result Flash on UltraTech for 4QFY2011

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	1,229	108.2
(% of sales)	18.3	19.5		7.8		19.4	17.4
Other expenses	834	681	22.4	366	128.1	2,455	1,139	115.4
(% of sales)	18.6	18.2		8.1		18.6	16.2
Total Expenditure	3,469	3,007	15.4	1,507	130.2	10,668	5,078	110.1
Operating Profit	1,087	733	48.2	416	161.4	2,683	2,035	31.9
OPM (%)	24.2	19.6		21.8		20.3	28.9
Interest	83	82	1.4	28	191.4	277	118	135.8
Depreciation	227	219	3.5	99	128.2	766	388	97.3
Other Income	44	35	24.7	13	244.9	146	59	147.6
PBT	821	468	75.6	301	173.0	1,786	1,588	12.5
Provision for Taxation	94	149	(36.7)	72	30.3	382	495	(22.8)
(% of PBT)	11.5	31.8		24.0		21.4	31.2
Reported PAT	727	319	127.9	229	218	1,404	1,093	28.4
PATM (%)	16.2	8.5		12.0		10.6	15.5
EPS (Rs)	27	12	127.9	18	44.5	51	88	(41.6)

Source: Company, Angel Research; Note: The figures are not comparable on yoy basis due to Samruddhi merger

Exhibit 2: Like-for-Like financials

Particulars `	4QFY11	3QFY11	4QFY10	%chg yoy	%chg qoq
Net Sales	4,490	3,715	4,206	6.8	20.9
PBIT	904	549	858	5.4	64.7

Source: Company, Angel Research

Exhibit 3: Per-tonne analysis

Particulars (`)	4QFY2011	3QFY2011	4QFY2010	chg (%) yoy	chg (%) qoq
Realisation/tonne	3,828	3,553	3,599	6.3	7.7
Raw material cost/tonne	574	530	638	(10.1)	8.3
Power & fuel Cost /tonne	877	924	645	36.0	(5.0)
Freight  cost/tonne	745	751	616	21.0	(0.8)
Operating profit/tonne	927	730	711	30.4	27.1
Depreciation/tonne	206	226	175	17.3	(8.9)
Net Profit/tonne	600	302	380	57.8	98.5

Source: Company, Angel Research