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Sequential flat NSR anchored EBITDA at Rs900/te  

Result Synopsis

Ultratech Cement(UTCEM) delivered a volume growth of +12%y/y to 25.9MT (+4% above YSECe) coupled with strong NSR of Rs6002/te (+7% y/y) translates in revenue of Rs155.2bn up by (+20% y/y; in?line YSECe) in Q3FY23. EBITDA & PAT came 5% & 8% below YSECe to Rs23.4 & 10.6bn respectively and declined by 4% & 38% y/y due to escalated cost but sequentially improved by +25% & +40% on account of peaked operating cost. For the quarter, EBITDA for UTCEM confined to Rs903/te (?14% y/y and +12% q/q) v/s YSECe of 985/te owing to sequential flat NSR, despite moderating operating cost. Considering 9MFY23 consolidated volume sales of 74MT, we have increased our estimate to 102.5MT (v/s 98.2MT earlier) that takes our revenue estimates up by 7% for FY23E. Given the 9MFY23 EBITDA of Rs986/te, we believeUTCEM to deliver an EBITDA of Rs1000/te in FY23E on account of strong NSR & operating cost moderation. Till Q3FY23, UTCEM commissioned ~10MTPA (5.5MTPA in 3QFY23) of new capacities out of 19.9MTPA announced under Phase?I, while remaining to be commissioned in the upcoming quarters. Therefore, we expect UTCEM volume to grow by +12/10% driving the revenue growth by +12/6% in FY24/25E. Looking at fuel cost dynamics, management indicated thatthe fuel& power costto buoyant at +Rs1400?1800/te for FY24 (v/s Rs800? 1000/te earlier) as a result we trimmed EBITDA by 6% to Rs1250/te for FY24E. Phase?I (remaining 9.9MTPA) & newly announced (22.6MTPA) expansion will aid UTCEM to grow at ~9% CAGR (v/s industry 6% CAGR) overFY23?25E. We maintain BUY rating with a TP of Rs8613 (earlier Rs8,453), valuing the stock at 16.5x EV/EBITDA on the FY25E.

Result Highlights

* UTCEM delivered +12% volume growth on both y/y and q/q basis and beats YSECe by +4%. Overall blended NSR improved by 7% y/y and flat sequentially to Rs6002/te (~3% below YSECe on higher non?trade contribution) translated in Revenue growth of +20% y/y and +12% q/q to Rs155.2bn in Q3FY23 (YSECe Rs153.8bn).

* UTCEM posted a total cost of Rs5099/te (1% below YSECe) up by 12% y/y in 3QFY22, largely due to elevated fuel/freight cost.  

* While the total cost/te softened by 2% q/q on account of operating leverage and peaked fuel cost.

* EBITDA & PAT came 5% and 8% below YSECe to Rs23.4bn & Rs10.6bn respectively, below by 4% & 38% y/y but improved by 25% & 40% sequentially.

* Owing to sequential flat NSR (~3% below YSECe) the EBITDA confines to Rs903/te (?14% y/y and +12% q/q) v/s YSECe of 985/te, despite the sequential total cost moderation.  

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