Ultratech Cement (UTCEM) Q4FY21 revenue increased by 34% YoY led by volume increase of 30% YoY. EBITDA increased by 51% YoY and EBITDA/t stood at Rs 1,388 in Q4. UTCEM Opex/t was largely flat QoQ. UTCEM highlighted that costs benefit is led by a) Reduction in fixed cost b) Freight cost benefitted from rail freight discounts and road freight savings and c) Fuel cost benefited from fuel mix optimization.
Commenting on the result review, IDBI Capital said, "EBITDA was higher than our / consensus estimate by 23% / 17%. Beat in number is driven by higher volume growth and lower costs. UTCEM has gained market share in FY21 as it reported cement sales volume growth of 6% YoY versus industry volume declined by 12% YoY for FY21. In Q4FY21, UTCEM witnessed uptick in the plant utilization in every month of Q4FY21 with March-21-month plant utilization of 90%+.
Post the result, we have factored better than expected result in FY22/23E. This has resulted in increase in the EBITDA by 5-6% over FY22-23E. Revised TP is Rs 6,120 (earlier Rs 5,744) based on unchanged 13x FY23E EV/EBITDA multiple (which is at premium to its last 10 years mean).
However, State wise lockdown has impacted sales volume in April -21 and UTCEM has abstained by giving any volume guidance for FY22E. This is restricting us to revise our current rating of 'Hold', despite strong result. We wait for clear environment to turn Buyer, as valuation (EV/EBITDA) at +1 STD of last 10 years mean factors the incremental capacity addition of 13mtpa by FY23E."
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