UltraTech Cement Q2 preview: Higher power cost, lower realisation may dent numbers

NEW DELHI: UltraTech Cement is all set to report 6-12 per cent in year-on-year profit growth for the September quarter on a double-digit jump in sales. Volumes may rise 5-6 per cent YoY but Ebitda per tonne may decline due to increase in power and fuel costs and lower realisation. Margins are likely to fall by 200 basis points, analysts said.

Emkay Global expects UltraTech to report 6.4 per cent YoY growth in net profit at Rs 1,310.2o crore compared with Rs 1,230.90 crore reported for the year-ago quarter. Sales are seen rising 10.6 per cent YoY to Rs 11,310.80 crore from Rs 10,231 crore YoY.

"Total volumes in India are expected to increase 6 per cent YoY to 20.4 million tonnes, while grey cement realisation is expected to increase 5.5 per cent YoY. Total cost per tonne is estimated to increase 7 per cent YoY. Accordingly, we estimate blended Ebitda per tonne in India will decline 5 per cent YoY to Rs 1,318," Emkay said.

Kotak Institutional Equities projects profit after tax for UltraTech's India business at Rs 1,373.50 crore, up 12.4 per cent YoY. Sales are seen at Rs 11,084.20 crore.

"We expect 5-6 per cent sequential increase in power-fuel cost and 4 per cent QoQ increase in freight costs led by higher pet coke and diesel prices in the last six months, resulting in a 5 per cent QoQ increase in costs per tonne in the September quarter. We estimate cement Ebitda per tonne to decline to Rs 1,250 per tonne (down 21 per cent QoQ or down 10 per cent YoY) led by a combination of higher variable costs and lower realisations," it said.

Sharekhan sees profit growth at 6.3 per cent and sales growth at 10.9 per cent. It sees operating profit margin falling 200 basis points YoY to 23.5 per cent from 25.5 per cent YoY.

"Lower OPM will lead to muted net earnings growth YoY," it said, adding that Ebitda per tonnes may fall 2.7 per cent YoY to Rs 1293 crore, owing to increase in power & fuel costs.