Ultra Tech,weak demand continues, profit is lower than expections
Rise (YoY) in EBIDTA but QoQ decline
UltraTech's 2Q EBIDTA rose 12 per cent YoY. Depreciation was much higher which also had one-off while other income was much lower; the tax rate at 30.9 per cent was also much higher. Resultant net earnings fell 4 per cent YoY.
Blended unit realisation rose 4 per cent to Rs252/bag (+2-3 per cent rise in grey cement realisations). Unit cost was up 6 per cent due to lower volumes. Unit freight was down 4 per cent due to lower diesel prices and seasonality. Raw material costs rose 9 per cent largely as the company provided for a levy on limestone under the District Mineral Fund (which included a prior period charge as well). Power & fuel costs remained flat.
Pressures continued as management estimates only 1 per cent YoY growth in industry volumes in 2Q show : a) east: +8 per cent ; b) west: +3 per cent; c) south: -4 per cent ; and d) north: +1 per cent growth. The road sector saw some improvements. As fresh orders (1,500km awarded till Jul-15) have been placed and there has also been resolution of past stuck projects 4,000km out of 8,600km - all of these would be concrete roads. Management, however, is cautious due to erratic monsoons, a delay in execution and surplus urban housing inventory remain are causes of concern.