UltraTech Q2 Result Update
Last updated: 21 Oct, 2020 | 12:12 pm
- Profit up 113% YOY, shattering estimates: India’s largest cement company UltraTech cement reported a 113% profit increase on a yearly basis. Consolidated net profit stood at ₹1,234.38 crore in the quarter ended September, well above the ₹835 crore consensus estimate.
- Margin boost on cost reduction: Revenue for the company rose 8% to ₹10,354 crore, its EBIT jumped 40% on a yearly basis to ₹2,945 crore because of cost reduction. Energy costs and other costs fell 9% and 18%, respectively, on a yearly basis combining to a 6% decline in overall production cost. Consequently, the operating margin shot to 27% as compared to 21% a year ago.
- Robust Volume growth: Volumes rose to 19.2 million tonnes from 16.03 million tonnes a year ago. For the half-year ended FY21, total volumes were down 2% on a yearly basis. Though demand from the commercial segment remains muted, rural and individual housing continue to drive volume growth.
- Debt Reduction: For the second quarter in a row, UltraTech has reduced its net debt significantly. With efficient operations and judicious working capital management, it has been able to pay off 4,728 crores of net debt in the first half of this fiscal year. The company’s debt stood at ₹12,312 crore as of September 30, down from ₹16,860 in the quarter ended March 2020. The debt to equity ratio currently stands at 0.27.
- Capacity: The company said that the 14.6 mtpa (metric tonne per annum) cement plants added by the acquisition of Century Cement during the previous financial year have been integrated and now the company is investing in improving operations further. Also work on its 3.4 mtpa cement capacity addition in Odisha, Bihar and West Bengal has picked up pace and is expected to get commissioned during FY22, in a phased manner.
UltraTech expects demand for cement to grow on the back of Government’s thrust on infrastructure and the expanding rural economy. As the economy limps back to recovery, UltraTech will be a major beneficiary, with a strong market position, huge capacity and efficient cost management. The volume trends also depict that the company has been able to sail through the pandemic without many difficulties.