REPORTS HEALTHY DOUBLE DIGIT VOLUME OFFTAKE - ULTRATECH CEMENT LATEST QUARTERLY RESULT

UltraTech Cement – Q3FY23 First Cut

(CMP: Rs 7178; MCap: Rs 2.07 lakh crore)

Q3FY23 Earnings Summary – Standalone

Net revenues grew by 20% YoY to Rs 15008 crore (I-direct estimate: Rs 15146 crore) mainly driven by volume growth of 13% YoY to 24.7 MT (I-direct estimate: 24.5 MT) Realisations (blended) rose by 7% YoY to Rs 6086/tonne, however was flattish on a QoQ basis. RMC business registered impressive volume growth of 29% for the quarter on YoY basis with sales of Rs 1000+ crore in Q3FY23. Premium products contributed to 18.8% of trade sales volume

On the cost front, RM cost per tonne (20% of COP) declined by 2% QoQ (up 4% YoY) to Rs 1055/t. Fly ash prices are higher by ~13% on a YoY basis and 4% on a sequential basis. Declining energy prices on a sequential basis (pet coke prices down 14% QoQ) did not percolate into reduction in power and fuel cost for the company mainly owing to high cost inventory and negative impact of exchange rate. Hence, power and fuel cost per tonne (34% COP) grew by 1% QoQ (up 34% YoY) to Rs 1781/t Company continued with higher usage of pet coke in the fuel mix (at 43% vs. 25% in Q3FY22 and 40% in Q2FY22). Diesel prices remained flattish QoQ, however the logistical costs were impacted to a certain extent owing to re-imposition of busy season surcharge on rail freight. Freight cost per tonne (27% of COP) grew by 3% QoQ (up 6% YoY) to Rs 1391/t. Other operating expenses per tonne (19% of COP) declined by 12% QoQ to Rs 989/t mainly on account of higher volumes (positive operating leverage). Overall cost of production declined by Rs 100/t (down 2% QoQ) to Rs 5216/t with major delta coming from other operating expense. Subsequently, EBITDA/tonne stood at Rs 870 (I-direct estimate: Rs 966, Q2FY23: 775, Q3FY22: Rs 1015)                

Reported EBITDA grew 25% QoQ (down 4% YoY) to Rs 2145 crore (I-direct estimate: Rs 2367 crore). Net profit grew by 38% QoQ to Rs 994.2 crore. Net debt declined to Rs 7722 crore (0.7x Debt/EBITDA) from Rs 8357 crore owing to reduction in working capital

View: With margins bottoming out in Q2FY23 and company utilising most of the high cost inventory, we believe the margin curve to improve going forward. Further, given the government's focus on infrastructure spending and affordable housing, the cement sector's long-term growth potential continues to remain healthy.

Impact: Neutral