UltraTech Cement jumps 5%, hits new high on solid December quarter results

Shares of UltraTech Cement hit a record high of Rs 5,800, up 5 per cent, on the BSE in Monday's opening trade after the company's net profit more than doubled to Rs 1,584 crore in the quarter ended December 31, 2020 (Q3FY21) on the back of higher volume growth. The company had posted a profit of Rs 712 crore in the corresponding period of the previous year. The stock surpassed its previous high of Rs 5,695 touched on January 11, 2021.

Higher net profit during the quarter was largely driven by rural and semi-urban housing demand; pick-up in government-led infrastructure also aided incremental cement demand. Moreover, pent-up urban demand is expected to improve with the gradual return of the migrant workforce.

The company’s consolidated net sales during the quarter grew 17 per cent year-on-year (YoY) to Rs 12,144 crore as against Rs 10,261 crore in the year-ago quarter. Volumes rose 14 per cent YoY to 23.9mt, led by an uptick in demand from government projects, infra, and urban real estate.

"While rural and semi-urban housing continues to drive growth, pick-up in government-led infrastructure aided incremental cement demand. Pent-up urban demand is expected to improve with the gradual return of the migrant workforce," UltraTech Cement said in its release.

While fuel prices have increased in recent months, operational efficiencies and tight control over costs are reflected in the company’s 26 per cent operating margin, it said.

Meanwhile, the company’s profit before interest, depreciation and tax (PBIDT) was at Rs 3,362 crore in the quarter gone by as against Rs 2,147 crore in the corresponding period of the previous year.

“UltraTech Cement’s strong pan-India distribution network and preferred supplier status for key infrastructure projects place it well to tap into expected growth in both retail and institutional (non-trade) cement demand in India. While it is ramping up its under-utilized acquired capacities, it also has a strong pipeline of expansion projects that offers strong growth visibility,” Motilal Oswal Financial Services said in a result update.

At 09:17 am, the stock was trading 3 per cent higher at Rs 5,702 on the BSE, as against a 0.64 per cent gain in the S&P BSE Sensex. A combined around 250,000 equity shares had hands on the NSE and BSE, so far.