Ultratech Cement Q2 preview: Volumes, performance among the key factors to consider

Cement major Ultratech Cement Ltd is scheduled to announce its September quarter 2024 (Q2FY25) results later today and brokerage firms expect the cement major to deliver a muted set of numbers in a quiet quarter, the demand was affected by several factors.

Lagging infrastructure activities after the general elections, average monsoon with floods in several countries and muted volume growth constrained the cement company’s prices. However, brokerages expect demand to increase gradually, followed by price hikes in the second half of the current financial year.

Analysts tracking the cement sector said Ultratech’s may disappoint quarterly (QoQ) as the second quarter is a wet period for the cement maker due to monsoon. Lower realization, ebitda per tonne and lackluster volume growth weighed on company sentiments, leading to margin contraction. However, the year-on-year (YoY) numbers may not be that poor.

Nirmal Bang Institutional Equities expects Ultratech Cement to report revenue of Rs 16,494 crore up 3% YoY but down 8.7% QoQ in the September 2024 quarter. Ebitda is seen at Rs 2,359 crore, a drop of 7.5% year-on-year and 22.4% quarter-on-quarter, while the ebitda margin may reach 15.9%. PAT is seen at Rs 1,070 crore, down 16.4% YoY and 26.1% QoQ.

The brokerage expects volumes to reach 30 million MT, up 12.5% ​​year-on-year, but down 6% quarter-on-quarter. Realization per TM is seen falling to Rs 5,492, with Ebitda per tonne coming in at Rs 786, down 17% on both comparisons. Nirmal Bang has a buy rating on Ultratech Cement.

Sharekhan pegs Ultratech’s revenue at Rs 14,986 crore, down 3.4% year-on-year and 14.5% quarter-on-quarter. It sees an operating margin contraction of 145 to 331 basis points (bp) to 13.7 percent for 2Q15, resulting in a net profit of €884 million, down 47 percent towards the quarter and 26.6 percent year-on-year.

“Volumes may grow by 4.5% y-o-y, but we expect realizations to decline by 7.6% y-o-y. We estimate Ebitda per tonne of R.765, down 16.4% y-o-y and 20.7% y-o-y Negative operating leverage and weak realizations lead to 26.6% y-o-y decline in net earnings,” the brokerage said with a price target of Rs 13,000 and a “buy” tag.

Axis Securities reports revenue of Rs 15,383 crore, down 15% quarter-on-quarter and 4% year-on-year. Ebitda is seen at Rs 2,342 crore, down 23 percent quarter-on-quarter and 8 percent year-on-year, with ebitda margin contracting by 70-160 bps to 15.2 percent for the quarter. PAT is seen at Rs 1,034 crore, bumping 39% QoQ and 19% YoY.

“Volume will grow year-over-year driven by increased new capacity, but revenue is lower year-over-year due to lower realization. Gross margin will be higher due to lower cost year-over-year. Ebitda margin will contract year-over-year due to lower realization. lower due to lower revenue and negative operating leverage, to be lower than last year due to lower operating performance.” he said