Demand concerns to weigh on UltraTech

Strong Q3 operating profit positive, but stock gains capped unless volume and realisation improve

UltraTech's operating performance for the quarter ended December (Q3) was impressive. Despite rising prices of inputs, sustained efforts on operating efficiencies and cost controls led to the firm topping estimates on profitability front. The stock gained 1.4 per cent on Monday to close at Rs 3,518. But, with worries over demand (volume growth) and realisation continuing, further gains may be capped.

With note ban impacting volumes and realisation, Q3 saw industry capacity utilisation levels decline to 60 per cent compared to 75 per cent in FY16. Adding to woes were rising input costs as those of coal, pet coke, and some