• Fri. May 26th, 2023

UltraTech Cement Q4 Net Profit Drops 32%; Should you invest in cement stock?

Ciment UltraTech share price: Cement giant UltraTech Cement released its January-March quarterly results on Friday. For the quarter under review, the company’s consolidated net sales were reported at Rs 18,436 crore, a growth of 19% from Rs 15,557 crore in the corresponding period of the previous year.

UltraTech Cement’s net profit for Q4FY23 was Rs 1,666 crore compared to a normalized profit of Rs 1,478 crore (before one-time extraordinary gains) in the corresponding period of the previous year. Its earnings before interest, depreciation and taxes was Rs 3,444 crores compared to Rs 3,165 crores in the corresponding period of the previous year.

For the full year 2023, UltraTech Cement’s consolidated net sales jumped 21% to Rs 62,338 crores from Rs 51,708 last year. Profit after tax was Rs 5,064 crore compared to a normalized profit of Rs 5,667 crore in the corresponding period of the previous year.

UltraTech Dividend Cement

The board of directors of the company has recommended a dividend of 380% at the rate of Rs 38 per share with a par value of Rs 10 per share, totaling Rs 1,097.01 crores. “In accordance with the provisions of the 2020 finance law, the dividend will be taxed in the hands of the shareholders at the applicable tax rates and the company will withhold tax at source as appropriate,” the company said in a filing. exchange.

The board has recommended a dividend of Rs 38 per share totaling Rs 1,097 crore for the financial year ended 31/0312023.

Should you buy it?

Brokerages shared their ratings and opinions on the stock in response to the big cement company’s Q4FY23 earnings results.

ICICI Securities Ltd, in its analysis, said: “The company had a strong fourth quarter of FY23 with volumes up more than 14% year-on-year, a drop in realization stopped at just under 1 % quarter on quarter, a decrease in variable cost per ton of more than 3% year on year and a limited increase in fixed costs of only 5.5% year on year/3% quarter on quarter.”

As a result, the company’s consolidated earnings before interest, tax, depreciation and amortization (EBITDA) of Rs 33.2 billion beat expectations by more than 4%. Blended EBITDA/tonne was Rs. 1,048 beating expectations by more than 4%.

“Still, we see limited scope to increase our earnings forecast. Despite lower fuel prices, we maintain that there is a risk of downward revision to consensus estimates given weak cement prices. In addition, continued industry-wide capacity additions and the overhang of Adani Group’s aggressive expansion limit the upward revision to our valuation multiple.We continue to value the company at 15x FY25E EV / EBITDA and maintain the “hold” rating with an unchanged target price of Rs 7,295,” the brokerage said in its report.

“We remain positive on the company’s volume outlook in the coming quarters given the access to additional capacity and better demand. Although range-bound cement prices are a challenge, easing fuel prices and UTCEM’s cost-cutting measures should help control the margin. Thus, we reiterate “accumulate” and largely retain our earnings estimates for FY24 and FY25. 325 based on 15.5 times (unchanged) FY25E EV/EBITDA,” said Elara Securities (India) Pvt Ltd.

On Friday, shares of UltraTech Cement closed up slightly by 0.71% at Rs 7,554.60 on BSE.

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