UltraTech Cement Q3 Results Review - Higher Than Expected Energy Costs Lead To Miss: ICICI Securities

ICICI Securities Report

UltraTech Cement Ltd.’s Q3 FY23 consolidated Ebitda at Rs 23.4 billion (down 3.5% YoY) was below our estimate but in line with consensus. Grey cement realisation rose marginally by ~0.5% QoQ, due to:

1. likely higher despatches in non-trade segment, and

2. sequentially flat contribution (18.8%) from premium cement.

Consolidated volumes grew ~12% YoY to ~26 million tonne (~83% capacity utilisation) implying continued market share gains for UltraTech Cement (industry is likely to report 10-11% YoY growth in Q3 FY23). Inflation in fuel cost/tonne was higher than expected and rose ~1% QoQ (impacted by a depreciating Indian rupee) versus our expectation of ~6% fall.

During the quarter, UltraTech Cement added 5.5 million tonnes per annum fresh capacity in Pali (1.9 mtpa), Dhule (1.8 mtpa) and Dhar (1.8 mtpa) and reached a total capacity of ~121 mtpa.

It plans to achieve ~131/154 mtpa by March 2023/March 2025 respectively in India.

Based on our checks, we expect demand to strengthen in Q4 FY23E and remain robust in FY24E. UltraTech Cement equipped with higher capacity shall be better placed to serve incremental demand.

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