UltraTech Cement surges 7% on strong operational performance in Q1

Consolidated Ebitda margins improved to 31 per cent in Q1FY21 from 27 per cent in the corresponding quarter of previous year

Shares of UltraTech Cement moved higher by 7 per cent to Rs 4,136 on the BSE on Tuesday after the company reported better-than-expected operational performance in the April-June quarter of FY21 (Q1FY21).

The company reported a consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) of Rs 2,353 crore, as against an average analyst estimate of Rs 1,702 crore. Ebitda margins improved to 31 per cent from 27 per cent in the previous year quarter. A volume decline of 22 per cent year on year (YoY) at 14.65 MT was also better than analyst estimates of around 34 per cent.

“The 'overheads control programme' initiated by the management helped to cut fixed costs by 21 per cent YoY. Prudent working capital management and control on cash flows are reflected in a reduction of net debt by Rs 2,209 crore during Q1FY21,” Ultratech Cement said in a press release.

In the available 68 operating days during this quarter, the Company kept a tight control on costs and cash flow, and achieved an effective capacity utilisation of 60 per cent across its network of 54 plants around the country, it said.

The company’s consolidated net sales was at Rs 7,563 crore against Rs 11,229 crore over the corresponding period of the previous year. The normalised Profit after tax was Rs 906 crore compared to Rs 1,281 crore in the corresponding period of the previous year.

Analysts on an average had expected net sales of Rs 7,478 crore and net profit of Rs 507 crore for the quarter.

“During 1QFY21, cement Industry surprised positively both on volumes and realisations front (in the background of pandemic). The volume growth trend in monsoon quarter would be key to determine how FY21 may shape up. Prices were robust in 1QFY21 vs. 4QFY20. If the positive (or even a flattish) demand growth trends sustain during monsoons, there is a possibility of upgrades to our FY21 estimates,” Antique stock broking said in quarterly preview report.