Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Maintain BUY on UltraTech Cement - Speeding on organic expansions! - HDFC Securities

Posted On: 2020-12-04 04:02:22 (Time Zone: Arizona, USA)

Mr. Rajesh Ravi, Institutional Research Analyst, HDFC Securities

UltraTech (UTCEM) has charted out its expansion plans for the next three years, whereby it will increase its grey cement/ clinker capacity in India by 19.5/11.4mn MT respectively, entailing a total Capex of Rs 65.3bn. Post this, its cement capacity in India will increase to 130mn MT by end FY23E/early FY24E. These should support its volume growth visibility FY24E onwards. The Capex rate is low, owing to ~50% brownfield expansions and lower clinker expansion needs. Multiple split GUs and WHRS additions will also help control operating cost, supporting its strong margins. We continue to like UTCEM for its robust margin outlook and debt reduction. We maintain BUY with an unchanged TP of Rs 5,670/share (15x Sep'22E consolidated EBITDA).

Capacity to increase by 18% in next three years: Over the next three years, UTCEM plans to add 19.5 mn MT of capacity organically, across east (10.2mn MT), central (5.1mn MT), north (2.5mn MT), and west (1.8mn MT) respectively. Of these, 6.7mn MT pertains to earlier announced expansions (3.3/3.4mn MT in central/eastern regions respectively) to be commissioned during FY21/22E. The additional 12.8mn MT announced today is expected to be completed by H2FY23E, as per the company. Post these expansions, UTCEM's grey cement capacity in India will increase by 18% to 130mn MT. To support these, UTCEM will increase its clinker capacity by 11.4mn MT across Rajasthan (2.7mn MT, greenfield), UP (2.3mn MT, greenfield), MP (3.7mn MT, greenfield), and Chhattisgarh (2.7mn MT, brownfield).

Improvement in capacity spread in eastern region and reduction in distribution cost: Post these expansions, UTCEM's capacity spread across north/central/east/west/south will improve to 20/22/19/22/16% respectively vs 22/22/13/24/19% in FY20. This will improve its capacity exposure in the high growth east markets. UTCEM is adding many split GUs across eastern and central regions, which will reduce its sales lead distance and lower opex. Additionally, UTCEM is also adding 57MW of WHRS across these clinker expansions, in addition to various other ongoing WHRS/solar power expansions. Thus, UTCEM would increase the share of low-cost green power to 34% (over the next three yrs) vs 13% currently, thus reducing costs.

Robust margin and balance sheet outlook: UTCEM expects to spend a total of Rs 65.3bn towards these 19.5 mn MT expansions. The Capex rate is low (Rs 3.4bn per mn MT), owing to brownfield expansion accounting for ~50% of it, and lower clinker expansion. We expect these expansions to get fully commissioned by 1QFY24E and bolster UTCEM's volume growth visibility FY24 onwards. Hence, we maintain our estimates for FY21/22/23E. We continue to like UTCEM for its robust margin outlook and debt reduction. We maintain BUY with a TP of Rs 5,670/share (15x Sep'22E consol EBITDA).

Shares of ULTRATECH CEMENT LTD. was last trading in BSE at Rs.5092.9 as compared to the previous close of Rs. 4892.25. The total number of shares traded during the day was 89242 in over 13317 trades.

The stock hit an intraday high of Rs. 5198.3 and intraday low of 4962.45. The net turnover during the day was Rs. 454412522.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

SRF Limited - Chemical biz's good performance may continue - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - ICICI Securities

Q3FY21 Company update - Zensar Technologies - ICICI Direct

JSW Steel - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Biocon Ltd - ICICI Direct

Symphony Ltd - Q3FY21 First Cut - ICICI Direct

Crompton Greaves Consumer Electricals - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Bajaj Finserv - ICICI Direct

Q3FY21 Result update - Bajaj Auto - ICICI Direct

Quant Pick - Hero MotoCorp - ICICI Direct

Company update - Cyient Ltd - Q3FY21 - ICICI Direct

Covid Recovery Pulse - Auto retail taper off in new year 2021 - ICICI Direct

Q3FY21 Result update - Asian Paints - ICICI Direct

Company update - Mphasis Ltd - Q3FY21 - ICICI Direct

SBI Life Insurance - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Syngene International - ICICI Direct

Stove Kraft Ltd (SKL) - IPO - Weak Financial Track Record - Reliance Securities

Maintain BUY on Bandhan Bank - Prudently cushioning for potential event risk - HDFC Securities

Maintain SELL on Asian Paints - Bolt out of the blue - HDFC Securities

Maintain ADD on Cyient - Gradual acceleration - HDFC Securities

Maintain ADD on Havells India - Beat across the board; justifying rich valuation - HDFC Securities

Maintain SELL on Shoppers Stop - Still not out of the woods! - HDFC Securities

Cyient - 'Persistent' in the making! - ICICI Securities

Balkrishna Industries - Industry exports growth continues to shine - ICICI Securities

Kajaria Ceramics - Impressive beat; rerating to continue - ICICI Securities

Jindal Steel & Power - Realisation driven earnings boost fails to improve risk reward - ICICI Securities

Asian Paints - Seemingly a beat in 3Q, however, flat revenues in 9MFY21 is what we should focus on - ICICI Securities

Westlife Development - Weak dine-in continues to be a drag - ICICI Securities

Bandhan Bank - Superior operating metrics can absorb interim shocks - ICICI Securities

Bajaj Auto - Higher exports, premium share boost margins - ICICI Securities

Hindustan Zinc - Valuation support dims - ICICI Securities

Havells India - Turnaround in Lloyd should lead to multiple expansion - ICICI Securities

Q3FY21 Result update - HDFC AMC - ICICI Direct

Q3FY21 Result update - Federal Bank - ICICI Direct

Q3FY21 Result update - Bandhan Bank - ICICI Direct

Q3FY21 Result update - Kajaria Ceramics - ICICI Direct

Biocon - Q3FY21 First Cut - ICICI Direct

MCX - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Sagar Cements - ICICI Direct

Q3FY21 Result update - Hindustan Zinc - ICICI Direct

Q3FY21 Result update - Havells India - ICICI Direct

IPO Review - Home First Finance - ICICI Direct

ADD on Bajaj Finance - Priced to perfection - HDFC Securities

Maintain BUY on IRB Infra - Smart recovery - Q3FY21 - HDFC Securities

Maintain BUY on Federal Bank - Sustained improvement in key metrics - HDFC Securities

Maintain ADD on L&T Infotech - Leadership continues - HDFC Securities

Maintain REDUCE on L&T Technology Services - Trajectory improving, but priced in - HDFC Securities

Tata Communications - Transition hiccups? - ICICI Securities

Federal Bank - Steady performance in most business metrics; collections back at pre-covid level - ICICI Securities

L&T Technology Services - Large deal wins are more than priced-in! - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020