Ultratech Q1 thrives on higher volumes and utilization

Ultra Tech Cements Results

Corporate Action
Last Updated: 2022-08-08T18:42:24+05:30

Most cement numbers were expected to do well in this quarter and we saw indications from ACC results. However, Ultratech Cements is the largest Indian cement company by a margin. It reported 54% sales growth but there was more to the Ultratech story in the Jun-21 quarter. Cement sales volumes were up 47% YoY while the cement capacity utilization ramped up from 46% to 73%. With cement production of 21.53 MT in the Jun-21 quarter, it made all the difference.

Let us now get to the specific top-line and bottom-line numbers. Ultratech Cement reported 54.21% growth in total sales revenues for the Jun-21 quarter at Rs.11,830 crore. During the same period, the net profits more than doubled to Rs.1,703 crore as the combination of higher volumes and higher capacity utilization became a force multiplier for profits. Like in the case of most industries, sequential sales and sequential profits were lower due to COVID 2.0, but that is a temporary phenomenon. What matters is that cement is having a whale of a time with the government spending heavily on infrastructure and Ultratech, being the market leader, is an obvious beneficiary of this trend.

Read: Cement Sector Updates

If you thought that higher volumes and higher capacity utilization must be a simple business, think again. Ultratech had to contend with 7% spike in raw material costs, 12% rise in power costs and 6% higher logistics costs. It managed to compensate for these costs through cost controls and inventory efficiency gains. For the quarter, Ultratech reported Rs.1,689 as EBITDA/ton, which is at par with the best in the industry. The best story of Ultratech came from the net margins at 14.39%; better than 10.35% in the Jun-20 quarter and 12.32% in the sequential Mar-21 quarter.

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