UltraTech hosted
conference call on April 29, 2024. In the conference call the company was
represented by Mr Atul Daga-Executive Director and CFO.
Key Takeaways of the call
Consolidated revenues
for the quarter stood at Rs 20,069 crore up 9% YoY in Q4FY2024.
Consolidated revenue
for the year stood at Rs 70908 crore up 12% YoY in FY2024.
In FY2024, the company
witnessed volume growth of 13% YoY and is the third straight year of double
digit growth. In absolute terms the company sold 94 MT of cement in FY2022 which
has crossed to 119 MT in FY2024.
In Q4FY2024 consolidated
volumes stood at 35.08 MT up 28% QoQ and 11% YoY.
All India cement
capacity utilization increased by 200 bps to 71%, however capacity utilization
for the company was significantly higher at 85% in FY2024 making consistently
in roads to the markets. Capacity utilization for
Jan-march quarter of FY2024 stood at 98% for the company.
The growth is achieved
on back of rapid growth in the Indian economy. The Indian economy is expected
grow in the range of 6.5%-6.8% in the current year and cement as an industry is
expected to grow higher than the economy.
NHAI has expended over
Rs 207000 crore in FY2024 highest ever a jump of 20% YoY. Construction of
highways touched a record of 10300 kms in FY2024 almost 35 kms per day.
Realization: Realizations declined by 6% QoQ across the country. However, the longer
period average prices have grown at a CAGR of 3.5% in the last 5 years and the
input cost also have grown at a CAGR of 3.5% in the last 5 years.
Prices have improved
in several markets. Prices have improved in Eastern, Southern and Maharashtra
market.
RMC: The company ended the year with 307 RMC plants serving the customers
all over the country. RMC consumes around 2.5 MT of cement for the company.
This business is small however is growing rapidly for the company.
RMC is EBITDA
accretive for the company.
Ultratech Business Solutions (UBS) :The company has the largest retail foot print
in the country with 3900 stores which is called Ultratech Business solution.
The company had 16% of the sales through this retail platform in Q4FY2024. UBS
is an one stop shop for IHB for all their home building requirements.
Cost:
Fuel cost when compared to Q3 remained at
same level and has stabilised. However, the company is not in position to provide
guidance on back of geopolitical issues.
Fuel consumption cost stood at Rs 2.03 per
K cal in Q4FY2024. The company expects the same to come down however material
decline is expected in Jan-march quarter of Q4FY2025.
Baltimore bridge collapse and Iran war kind
of situations will have an impact on the cost of fuel.
Other
operating income: Increase in other operating
income in Q4FY2024 is on account of incentives received and volume play kicking
in.
Other
Cost:
Operating leverage benefits resulted in stable
other expenses.
EBITDA per ton stood at Rs 1185/ton for India operations, an increase of
Rs 125/per MT.
Cost efficiencies, continues increase in
green power mix, lower fuel cost, increase in alternate fuel ratio and
operating leverage continue to improve the cost parameters. Over the next three
years as the company continues to grow the company expects operating cost per
ton to come down by Rs 200-300/ per ton.
Decline in operating cost will be led by
increase share of green power which is 24% to 60% or higher by FY2027. ( WHRS
fuel cost is lower by 90% when thermal power and solar power by 40% when
compared to thermal power); increase in ratio of clinker to cement from the
current 1.44; the company expects lead distance to come down; Alternate fuel
ramp up from current 5-6% to 15-16% and by operating leverage kicking in.
The company has a lead distance of around
400 kms and even a decline in 25 kms will lead to decline in Rs 75/ton.
Expansion:
All the company’s organic capex expansion is
on track.
The company plans to increase the domestic
capacity to 183.5 MT excluding Kesoram’s 10.75 MT capacity. Also the company
has put on hold 2.7 MTPA capacity expansion at Hotgi, maharastra grinding unit
as Kesoram has a plant in that market.
The company has received the CCI approval
for Kesoram Industries acquisition. The company plans to merge the same from
effective April 01, 2024 once the company receives all regulatory approvals.
The company is expecting the nod from SEBI and stock exchanges before the
company files the scheme with NCLT. Kesoram has refinanced its debt and has
reduced the cost of its debt by 50%.
Last week the company acquired a grinding
unit in Maharashtra and with surplus clinker, this acquisition provides the
company an unique opportunity to grow in the fast growing state of Maharashtra.
CAPEX:
The company expects to incur CAPEX of around Rs 9500
cr in FY2025.
WHRS:
Company says about 150 MW of Waste Heat Recovery
Systems (WHRS) will get commissioned in the next two years.
Net
Debt:The company expects to be zero net debt by
March 2025 excluding Kesoram Industries.
Consolidation: South market is fragmented in nature as such the company believes
that there will more opportunities for consolidation in Southern Markets.
The company will look at profitable growth
opportunities for mergers and acquisition.
Outlook:
India is urbanising and vertical houses are increasing but still India
remains a individual home (IHB)builder market. IHB is the biggest drivers of
demand in India for cement.
The company expects some moderation in demand going forward in FY2025.
However, the company expects slowdown to be shorter than earlier years
primarily due to private sector housing momentum has also picked up. The
company expects high single digit growth in FY2025 for the industry and
Ultaratech is expected to do better than that.
The company wants to grow with the market. India is a growing market. If
there is a opportunity the company will add capacity and the company will have
organic opportunities to grow as it has enough mine and land.
Despite the company operating at 98% capacity utilization in Q4FY2024,
it has sufficient capacity to grow and keep growing. The company expects to add
15-17 MT capacity in FY2025.
Prices are expected to remain stable to
positive going forward in FY2025. Players have not thought about price
increases because of softened input prices, their profits are getting delivered.
Realizations are purely demand and supply
driven.
Dividend: The board of directors have recommended final dividend of Rs 70 per
equity share.
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