Ultratech Cement hardens after solid Q4 numbers

Ultratech Cement jumped 3.07% to Rs 3,545 after consolidated net profit surged 204.79% to Rs 3,243 crore on 13.07% decline in net sales to Rs 10,579 crore in Q4 March 2020 over Q4 March 2019.

Profit before tax (PBT) fell 4.21% YoY to Rs 1,461.97 crore during the quarter. Current tax expense fell 22.10% to Rs 246.61 crore during the period under review. The result was announced during market hours today, 20 May 2020.

Consolidated net profit surged 141.89% to Rs 5,815 crore on 1.40% increase in net sales to Rs 41,476 crore in the year ended March 2020 (FY20) over the year ended March 2019 (FY19). PAT includes a one-time tax gain of Rs 2,112 crore. PBT rose 51.14% to Rs 5242.30 crore in FY20 over FY19.

EBITDA skid 1% to Rs 2,639 crore in Q4 March 2020 as against Rs 2,672 crore in Q4 March 2019. EBITDA margin stood at 25% in Q4 March 2020 as against 22% in Q4 March 2019.

Consolidated sales volume tumbled 16% to 21.44 million tonnes in Q4 March 2020 over 25.43 million tonnes in Q4 March 2019. Consolidated net debt stood at Rs 16,860 crore in Q4 March 2020 as against Rs 22,111 crore in Q4 March 2019 and Rs 18,625 crore in Q3 December 2019. During the year ended 31 March 2020, the company has reduced its Net Debt to EBITDA (earnings before interest, tax, depreciation and ammortization) ratio to 1.7x from 2.83x as of the year ended, 31 March 2019.

Due to COVID-19 outbreak, the firm operations across locations were shut down in line with the government directives. The construction activity across the country was halted, which is normally at its peak in the month of March, leading to an adverse impact on the company's operations during the quarter ended 31 March 2020. However, select activities were allowed to operate from 20 April 2020, by the Government of India. The firm resumed its operations at its establishments after obtaining necessary government approvals and ensuring compliance with the statutory guidelines. The company has now adopted the provisions of the standard operating procedure announced by the Ministry of Home Affairs, Government of India.

Meanwhile, the scheme of demerger for acquiring the cement business of Century Textiles and Industries became effective from 1 October, 2019. The plants have been ramping up production month on month touching average capacity utilisation of over 80% during the quarter ended March 2020. The firm has put in place a cost reduction plan to bring the operations in line with its existing standards. 65% of sales from the acquired Century Textiles and Industries plants during the quarter were under the UltraTech brand. Brand integration is underway and is expected to reach more than 80% by Q3FY21. The quarter witnessed a remarkable improvement in operating margin. The overall integration is likely to be completed by end of Q3 FY2021.

The board recommended a dividend of Rs 13 per equity share. Meanwhile, the board had also approved the issuance of redeemable non-convertible debentures (NCDs), from time to time, in one or more tranches, on private placement basis, within the borrowing limits approved by the shareholders at the Annual General Meeting (AGM) of the company held on 18 July 2019.

UltraTech Cement manufactures a range of products that cater to construction needs from foundation to finish, including Ordinary Portland Cement (OPC), Portland Blast Furnace Slag Cement (PSC), Portland Pozzolana Cement (PPC), white cement including white cement-based products and ready-mix concrete.

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