Recommendation: Buy (again!!)
CMP = Rs 824
Price target: Rs 1,100
Key points:
- UltraTech Cement (UltraTech) in their Q4FY2008 results reported a top line growth of 9.3% yoy at Rs 1,601.6 crore. Volumes for the quarter stood at 4.88 million metric tonne (MMT) against 4.81 MMT a year ago, implying an increase of 1.5% yoy.
- The operating profit margin (OPM) for the quarter improved by 260 basis points yoy to 30.5%. The OPM improved mainly on account of higher cement prices. The earnings before interest, depreciation, tax, and amortisation (EBIDTA) per tonne for the quarter stood at Rs 1,001, higher by 17.8% yoy. However, on a sequential basis EBIDTA per tonne was down 7.9%, as the increase in the cost of manufacturing cement was higher compared to the rise in the cement prices. For the quarter ended, the company reported a profit after tax (PAT) of Rs 282.8 crore, up 22.2% yoy.
- The cost of raw material per tonne of cement during the quarter ended shot up by 38.4% yoy to Rs 326. The cost of power and fuel per tonne of cement also was higher by 15.5% yoy to Rs 756.5. This was mainly on account of higher domestic and imported coal prices. Imported coal prices were up almost 100% yoy.
- For the quarter ended, the freight and handling expense per tonne of cement was lower by 10.6% yoy at Rs 578.7. However it was marginally up on a sequential basis. The increase in freight and handling cost sequentially can be attributed to the diesel price hike in February 2008.
- For the year ended FY2008, on a standalone basis the net sales stood at Rs 5,509.22 crore, up 12.2% yoy. The operating profit stood at Rs 1,720.06 crore, up 21.3% yoy and the PAT stood at Rs 1,007.61 crore, up 28.8% yoy. For the year ended FY2008, on a consolidated basis the net sales stood at Rs 5,623.82 crore, up 13.2% yoy and the PAT was reported at Rs 1,010.05 crore, up 28.7% yoy.
- The company has recently announced a dividend of Rs 5 per share. At the current market price of Rs 825, UltraTech is trading at 10.6x its FY2009E earnings per share (EPS) and at an enterprise value/tonne of $137.
- I maintain a Buy recommendation on the stock with a price target of Rs 1,100 over next 6 months.
Be a better friend, newshound, and know-it-all with Yahoo! Mobile. Try it now.
