UltraTech Cementimages.moneycontrol.com/...Cement-21072020-Dolat.pdfMDA Overview The cement...

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Annual Report 2020: Tough times don’t last, tough companies do Ultratech Cement in its FY20 annual report, throws light on the famous proverb ‘Tough times don’t last, tough companies do’. It highlights that given the uncertainty around, companies with quality leadership, sound business fundamentals and a track record of winning in turbulent times will emerge as champions. In these turbulent times, company’s focus is to conserve cash, safety of its team and assets and strengthening business relationships. On the positive side, this covid-19 led recession is likely to be one of the shortest, assuming no second wave of the pandemic recurs. MDA Overview The cement industry, after witnessing a healthy demand growth of ~13% in 2018-19, exhibited slowdown with de-growth due to various factors like general economic slowdown, general elections in April-May’19, extended monsoons, low capex on infrastructure, financial stress in the NBFC and housing sectors and lastly the outbreak of Covid-19 which impacted construction activities leading to de-growth for FY20, first time in the last two decades. The nationwide lockdown amid the coronavirus outbreak will have a significant near-term impact on the cement industry. Once the lockdown is fully relaxed, the migrant labour is expected to return and resume activity. However, increase in government spends on health and public welfare; weak real estate and an overall slowdown in the economy is expected to reflect in a subdued performance in FY21. Financial Snapshot Revenue up 1.2% YoY to Rs421.2 bn in FY20 led by 5.2% YoY growth in realization to Rs5,117/ tn which was partially offset by 3.8% de-growth in FY20. EBITDA/tn increased by 31.3% YoY to Rs1,128/ tn in FY20 led by 5.2% YoY growth in realization to Rs5,117/ tn coupled with lower cost by 0.4% YoY to Rs3,989/ tn. APAT grew 47.2% YoY to Rs37.1 bn in FY20. Strategy UTCEM’s focus is to improve its businesses and consolidate its market position to maximize long term value creation for the shareholders. Their strategy is to strengthen the position as a leading building material provider by becoming a one stop solution for the construction industry. Some of the actions initiated by the company to achieve its strategy is to expand its capacities with minimum cost, reduce its overall costs, securing sufficient limestone reserves to serve additional capacities, acquiring stressed assets at attractive valuation, launching new value added products, strengthen balance sheet, taking environmental measures and training employees. Major Highlights of FY20

With acquisition of the Century cement business, company’s total cement manufacturing capacity stands at 114.8 MTPA.

UTCEM commissioned 2.0 MTPA cement grinding capacity at Bara UP and 6.25 MTPA capacity of its wholly owned subsidiary, Ultratech Nathdwara Cement Ltd.

Ultratech Cement Middle East Investments Ltd (wholly owned subsidiary), divested its entire shareholding in Emirates Cement Bangladesh Ltd and Emirates Power Company Ltd to Heidelberg Cement Bangladesh Ltd for EV of US$ 30.2 mn.

Ultratech added various new value-added products and Ultratech commissioned 33MW of WHRS plant.

CMP Rs 3,863

Target / Upside Rs 4,069 / 5%

BSE Sensex 37,946

NSE Nifty 11,162

Scrip Details

Equity / FV Rs 2,886mn / Rs 10

Market Cap Rs 1,115bn

USD 15bn

52-week High/Low Rs 4,754/Rs 2,910

Avg. Volume (no) 600,182

NSE Symbol ULTRACEMCO

Bloomberg Code UTCEM IN

Shareholding Pattern June'20(%)

Promoters 60.0

MF/Banks/FIs 14.6

FIIs 16.1

Public / Others 9.3

Ultratech Cement Relative to Sensex

VP Research: Shravan Shah Tel: +91 22 40969749

E-mail: [email protected]

Associate: Maulik Shah Tel: +91 22 40969775

E-mail: [email protected]

70

80

90

100

110

120Ju

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Aug-1

9

Sep-1

9

Oct-19

Nov-

19

Dec-

19

Jan-2

0

Feb

-20

Mar-

20

Apr-

20

May-

20

Jun-2

0

Jul-20

UTCEM SENSEX

UltraTech Cement

Accumulate

July 21, 2020

July 21, 2020 2

Annual Report Macro View

Key Management No Change

Board of Directors

Mrs. Renuka Ramnath (DIN 00147182) resigned from the Board of Director of the Company as the Non – Executive Independent Director w.e.f. 21st October, 2019. Mr. O. P. Puranmalka (DIN: 00062212), ceasing to be Non – Executive Director w.e.f. 18th July, 2019. Completion of term of Mr. Girish M. Dave (DIN: 00036455), as Non – Executive Independent Director upto 5th August, 2019. Appointment of Mrs. Usha Sangwan (DIN: 02609263), as the Additional Non - Executive Independent Director w.e.f. 10th January, 2020.

Credit Rating

FY2019 FY2020

Ind Ra

IND AAA/Stable (NCD) IND A1+ (CP)

IND AAA/Stable IND A1+ (WC limits)

IND A1+ (Short Term loans)

IND AAA/Stable (NCD) IND A1+ (CP)

IND AAA/Stable IND A1+ (WC limits)

IND A1+ (Short Term loans)

CRISIL

CRISIL AAA/Stable (NCD) CRISIL AAA/Stable (ECB)

CRISIL A1+ (CP) CRISIL AAA/Stable (Rupee Term

Loan)

CRISIL AAA/Stable (NCD) CRISIL AAA/Stable (ECB)

CRISIL A1+ (CP) CRISIL AAA/Stable (Rupee Term

Loan)

Auditors Statutory and Cost Auditors remain the same. Secretarial Auditor changed to Makarand M Joshi & Co. from BNP & Associates.

Pledged Shares

% of shares pledged:

FY2019 FY2020

- -

Macro-economic Factors

COVID-19 struck India at a time when the underlying economic conditions were subdued due to global uncertainty and stress in the domestic financial system. Against this backdrop, a stringent national lockdown to slow the spread of the pandemic started in the last week of FY20 and remained active to varying degrees in different geographies through most of Q1FY21. It is estimated that ¬80% of India’s GDP originates from districts which were classified under the red and orange zones during the lockdown, where economic activity remained severely constrained. India’s GDP is likely to contract in FY21, which would be the first such instance in over four decades. The contraction is estimated to be particularly severe during Q1FY21.

Key Holders

Shareholding Pattern Mar’19 Jun’20

A. Promoters 61.69 60.04

B. Public Shareholding

1. Institutions:

a. Mutual Funds 3.01 10.61

b. Banks/FI 0.08 0.15

c. Central Govt. - -

d. State Govt.(s) - -

e. Venture Capital Funds - -

f. Insurance Companies 4.70 3.83

g. FII(s) / FPI(s) 20.00 16.10

h. Foreign Venture Capital Funds - -

i. Others (Alternate Investment Funds) - -

j. Qualified Institutional Buyer - -

2. Non-Institutions:

a. Bodies Corp. 3.57 2.09

b. Individuals 5.34 5.63

c. Others 0.91 1.55

C. Shares held by Custodian for GDRs & ADRs - -

Total 100.00 100.00

Source: Company, DART

July 21, 2020 3

Remuneration of Key managerial personnel

Name of Director Designation Remuneration (Rs mn)

FY18 FY19 FY20

Kumar Mangalam Birla Chairman and Non-Executive Director 184.5 155.3 - Mrs. Rajashree Birla Non-Executive Director 10.0 13.2 12.2 Arun Adhikari Independent Director 1.3 1.7 2.6 Mrs. Alka Bharucha Independent Director 0.8 1.9 2.8 G. M. Dave Independent Director 2.4 2.5 0.8 Mrs. Sukanya Kripalu Independent Director 1.6 1.6 2.0 S. B. Mathur Independent Director 2.7 2.9 3.7 Mrs. Renuka Ramnath Independent Director 0.7 0.3 0.4 O. P. Puranmalka Non-Executive Director 0.1 0.1 - K. K. Maheshwari MD 136.1 129.6 129.2 K. C. Jhanwar Deputy MD and Chief Manufacturing Officer - 18.9 64.0 Atul Daga Whole-time Director and CFO 32.2 26.9 26.1 S. K. Chatterjee CS 10.8 12.2 12.8

Source: DART, Company

Board and Committee Composition

Name of Directors Audit Nomination & Remuneration

Stakeholders Relationship

Finance CSR

Kumar Mangalam Birla •

Mrs. Rajashree Birla

Arun Adhikari • • S. B. Mathur G.M. Dave

Mrs. Renuka Ramnath Mrs. Alka Bharucha • • • K. K. Maheshwari • •

D. D. Rathi Mrs. Sukanya Kripalu • •

K. C. Jhanwar • Atul Daga • O. P. Puranmalka

Total No. of Members 4 3 3 3 3

Source: Company, DART, Chairperson, • Member

July 21, 2020 4

Key Takeaways from the MD&A The cement industry, after witnessing a healthy demand growth of ~ 13% in

FY19, exhibited a decline in growth in FY20. Cement demand was sluggish during H1FY20 exacerbated by the general economic slowdown. H1FY20 witnessed extended monsoons, low capital expenditure on infrastructure and road activities, along with financial stress in the NBFC and housing sectors. The improving demand situation since Dec’19 could not be sustained due to outbreak of COVID-19 in Mar’20.

The nationwide lockdown, amid the coronavirus outbreak, will have a significant near-term impact on the cement industry. While the sector witnessed robust demand prior to the lockdown, the event led to the closure of cement plants and cessation of construction activities at the sites. This led to a complete halt in cement dispatches. As a result, volumes were negligible during the last week of Mar’20 and entire Apr’20.

Once the lockdown is fully relaxed, the migrant labour is expected to return from their native towns and resume activity at the construction sites. Similarly, the companies are also expected to take a week to ramp up the activities within the plants post relaxation. However, increase in government spends on health and public welfare, weak real estate and an overall slowdown in the economy is expected to reflect in a subdued performance in FY21.

Major Highlights of FY20 Acquisition of the Century Cement Business

The Scheme of Demerger for acquisition of the Century Cement Business was made effective from 1 Oct’19. With this acquisition, company’s cement manufacturing capacity stands at 114.8 MTPA, including its overseas capacity. Post this acquisition, the Company has strengthened its position in markets in Maharashtra, Central and Eastern India. The acquired plants are being rapidly integrated with the systems and processes and have achieved capacity utilisation of over 80% during Q4FY20. Further, a cost reduction plan has been implemented to streamline the operations and bring them in line with the existing standards. During Q4FY20, 65% of sales from the acquired Century Cement Business plants was made under the UltraTech brand. Brand integration is underway and is expected to reach over 80% by Q3FY21. Q4FY20 also witnessed a remarkable improvement in the operating margin. The overall integration is likely to be completed by the end of Q3FY21.

Bangladesh Operations During the year, company’s wholly owned subsidiary, UltraTech Cement Middle East Investments Limited, divested its entire shareholding in Emirates Cement Bangladesh Limited and Emirates Power Company Limited to Heidelberg Cement Bangladesh Limited at a final Enterprise Value of BDT equivalent of US$ 30.2 million.

The company commissioned a 2.0 MTPA cement grinding capacity at Bara, Uttar Pradesh, taking its total capacity in India to 111.35 MTPA, including 6.25 MTPA capacity of its wholly owned subsidiary, UltraTech Nathdwara Cement Limited (UNCL).

UltraTech added various new value-added products like UltraTech Super,

UltraTech Premium and UltraTech Weather Plus. Revenue of these new products scaled to over 8% total revenue in FY20.

July 21, 2020 5

The company commissioned 33MW of Waste Heat Recovery System (“WHRS”) capacity, which is under stabilization and its full benefit will be realized from FY21. They will also commission another 27MW of WHRS capacity during FY21, taking the total WHRS capacity to 145 MW catering to ~13% of your company’s current total power requirement. The company plans to increase its solar and wind power capacity from 99 MW to more than 350 MW by the end of FY22 and cater to ~7% of the total power requirements.

Financial Analysis

Capacity Cement capacity was flat YoY but increased by 69.5% between FY16-FY20 to 114.8 mtpa.

Capacity


Region wise capacity

Region MTPA FY20 Revenue Share (%)

Integrated Units Grinding Units Bulk

Terminals Jetty White

Cement & Putty Unit

West India 27.7 24% 5 5 2 5 -

North India 23.8 17% 4 6 - - 1

Central India 23.3 23% 7 5 - - 1

East India 16.1 21% 3 5 - - -

South India 20.5 15% 4 2 4 - -

India 111.4 23 23 6 5 2

Bahrain 1.0

UAE 2.4

Total 114.8


67.770.3

89.0

113.4 114.8

60

70

80

90

100

110

120

FY16 FY17 FY18 FY19 FY20

Capacity (MT)

July 21, 2020 6

Extensive domestic distribution network

No. of dealers 29,795

No. of retailers 64,204

UBS outlets 2,145

Truck fleet 37,600

Destinations served 30,500

Daily truck movement 9,500

Daily rake movement 30


Cement Production Cement production decreased by 3.8% to 82.3 mt in FY20 vs. 85.6 mt in FY19. Volumes were impacted in last 10-15 days of Mar’20 on account of lockdown due to covid-19. Capacity utilization decreased to 71.4% in FY20 from 75.5% in FY19.

Production and Capacity utilization


Revenue and revenue Growth Revenue increased by 1.2% YoY in FY20 to Rs421.2 bn led by 5.2% increase in realization which was partially offset by fall in volume by 3.8% YoY.

Revenue grew at 13.8% CAGR between FY16-FY20.


76.4 76.0

71.7

75.5

71.7

70.0

71.0

72.0

73.0

74.0

75.0

76.0

77.0

45

50

55

60

65

70

75

80

85

90


Production (MT) Capacity Utilization

251.5 253.7

309.8

416.1 421.2

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

240

260

280

300

320

340

360

380

400

420

440


Revenue (Rs bn) Revenue growth (%)

July 21, 2020 7

Volume and Realization Volume de-grew by 3.8% YoY to 82.3 mt in FY20 on account of lower demand attributable to the overall economic slowdown, general elections during Q1FY20, extended monsoons, and the impact of COVID-19. Realization increased by 5.2% YoY to Rs5,117/ tn which helped revenue increase by 1.2% YoY.

Volume trend Blended realization trend

Sources: Company, DART Sources: Company, DART

Expenses Raw materials cost decreased by 10.9% YoY to Rs63.1 bn. Raw material cost per ton too decreased by 7.5% YoY to Rs767/ tn.

Raw material as a % to revenue Raw material cost/ tn trend


52 53

64

8682

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

40

50

60

70

80

90


Volume (MT) Volume growth (%)

4863

4754

4852 4863

5117

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

4,600

4,700

4,800

4,900

5,000

5,100

5,200


Realization/ tn (Rs) Growth (%)

17.6 17.7

17.1 17.0

15.0

14

15

15

16

16

17

17

18

18

30

40

50

60

70

80


Total Raw Material (Rs bn) % of Revenue

854842

828 829

767

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

720

740

760

780

800

820

840

860

880


Total Raw Material/ tn (Rs) Growth (%)

July 21, 2020 8

Employee expenses increased by 9.5% YoY to Rs25.1 bn in FY20 as against Rs22.9 bn in FY19. Employee cost/ tn too increased 13.8% YoY to Rs305/ tn as against Rs268/ tn in FY19.

Employee exp as a % to revenue Employee exp/ tn trend


Power and fuel cost decreased by 10.3% YoY to Rs84.7 bn as against Rs94.4 bn in FY19 mainly due to drop in fuel prices. Power and Fuel cost/ tn too decreased 6.8% YoY to Rs1,029/ tn as against Rs1,103/ tn in FY19. Imported pet coke prices declined 18% from US$ 102/t to US$ 84/t. Similarly, indigenous pet coke prices were also down 17%.

Power & Fuel cost as a % to revenue Power & Fuel cost/ tn trend


5.7

6.0

5.8

5.5

6.0

5.25.35.45.55.65.75.85.96.06.1

10

12

14

16

18

20

22

24

26


Employee expense (Rs bn) % of Revenue

279

285 284

268

305

-10.0

-5.0

0.0

5.0

10.0

15.0

260265270275280285290295300305310


Employee expense/ tn (Rs) Growth (%)

18.2

16.8

20.4

22.7

20.1

15

17

19

21

23

25

30

40

50

60

70

80

90

100


Power & Fuel cost (Rs bn) % of Revenue

885

800

992

1103

1029

-30

-20

-10

0

10

20

30

750

800

850

900

950

1,000

1,050

1,100

1,150


Power & Fuel cost/ tn (Rs) Growth (%)

July 21, 2020 9

Freight charges decreased by 4.7% YoY to Rs97.3 bn as against Rs102.1 bn in FY19. Freight charges/ tn too decreased 1.0% YoY to Rs1,181/ tn as against Rs1,193/ tn in FY19. This was mainly due to reduction in lead distance and exemption from busy season surcharge on railway freight for an extended period. Diesel prices were also lower by 4% over the previous year. Moreover, the integration of acquired assets supported in realizing synergies, thereby lowering logistics costs.

Freight cost as a % to revenue Freight cost/ tn trend


Other expenses increased by 11.2% YoY to Rs58.3 bn as against Rs52.4 bn in FY19. Other expenses/ tn too increased 15.6% YoY to Rs708/ tn as against Rs612/ tn in FY19.

Other expenses as a % to revenue Other expenses/ tn trend


23.8

23.323.6

24.5

23.1

22

23

23

24

24

25

25

40

50

60

70

80

90

100

110


Freight cost (Rs bn) % of Revenue

1155

1106

1145

11931181

-6

-4

-2

0

2

4

6

1,100

1,120

1,140

1,160

1,180

1,200


Freight cost/ tn (Rs) Growth (%)

15.3

15.7

13.2

12.6

13.8

12

13

13

14

14

15

15

16

16

30

35

40

45

50

55

60


Other expenses (Rs bn) % of Revenue

742 744

641

612

708

-20

-15

-10

-5

0

5

10

15

20

600

620

640

660

680

700

720

740

760


Other expenses/ tn (Rs) Growth (%)

July 21, 2020 10

Total expenses decreased by 4.2% YoY to Rs328.4 bn as against Rs342.6 bn in FY19. Total expenses/ tn too decreased 0.4% YoY to Rs3,989/ tn as against Rs4,005/ tn in FY19.

Total expenses as a % to revenue Total expenses/ tn trend


Margins EBITDA margin increased by 438 bps YoY to 22.0% in FY20. EBITDA/ tn too increased by 31.3% YoY to Rs1,128/ tn as against Rs859/ tn in FY19. This was mainly because of better realizations (Rs5,117/ tn, +5.2% YoY) and lower cost (Rs3,989/ tn, -0.4% YoY) in FY1.

EBITDA Margin Trend EBITDA/ tn Trend


Depreciation: Depreciation increased by 10.3% YoY to Rs27.0 bn in FY20 as against Rs24.5 bn in FY19 mainly on account of the impact of implementation of new Indian Accounting Standard (IndAS) 116 Leases and full year depreciation relating to the acquired Century Cement Business. Finance Cost: Finance cost increased by 11.7% YoY to Rs19.9 bn in FY20 as against Rs17.8 bn in FY19 due to impact of debt taken for acquiring UNCL, full year impact on borrowings transferred alongwith the Century Cement Business, and the impact of IndAS 116 Leases. Effective Tax Rate: Total effective tax rate for FY20 stood at -10.8% vs. 30.8% in FY19.

80.5

79.5 80.2

82.3

78.0

76

77

78

79

80

81

82

83

150

200

250

300

350

400


Total Cost (Rs bn) % of Revenue

3916

3777

3889

4005 3989

-12-10-8-6-4-20246

3,700

3,750

3,800

3,850

3,900

3,950

4,000

4,050


Total Cost/ tn Growth (%)

19.5

20.5

19.8

17.7

22.0

15

16

17

18

19

20

21

22

23

40

50

60

70

80

90

100


EBITDA (Rs bn) EBITDA Margin (%)

948976 962

859

1128

-20

-10

0

10

20

30

40

800

850

900

950

1,000

1,050

1,100

1,150


EBITDA/ tn (Rs) Growth (%)

July 21, 2020 11

APAT: Reported PAT increased by 141.9% YoY to Rs58.1 bn in FY20 as against Rs24.0 bn in FY19. After adjusting exceptional items, APAT increased by 47.2% YoY to Rs37.1 bn in FY20 as against Rs25.2 bn in FY19. APAT margin increased by 275 bps YoY to 8.8% in FY20 as against 6.1% in FY19. Return Ratios: ROCE increased by 428 bps YoY to 11.8% in FY20 as against 7.5% in FY19 and ROE also increased by 180 bps YoY to 10.2% from 8.4% in FY19.

PAT margin trend Return Ratios Trend


9.9

10.7

8.3

6.1

8.8

5

6

7

8

9

10

11

20

23

25

28

30

33

35

38

40


APAT (Rs bn) APAT Margin (%)

12.111.7

10.1

8.4

10.2

9.1 9.59.0

7.5

11.8

6

7

8

9

10

11

12

13


ROE (%) ROCE (%)

July 21, 2020 12

Balance Sheet Analysis Networth: Networth increased 15.9% YoY to Rs391.2 bn in FY20 as against Rs337.5 bn in FY19. During the year, your Company allotted 20,425 equity shares of Rs10/- each to option grantees upon exercise of stock options and RSUs in terms of ESOS-2006 and ESOS-2013. It also allotted 13,961,960 equity shares of Rs10/- each to shareholders of Century in terms of the provisions of the Scheme of Demerger. As a result, the paid-up equity share capital of Ultratech stood at Rs2,886 mn comprising of 288,625,105 equity shares of Rs10/- each.

Net Debt: Net Debt decreased 24.2% YoY to Rs164.5 bn in FY20 as against Rs216.9 bn in FY19. Net D:E too decreased to 0.42x in FY20 as against 0.64x in FY19. Net Debt/ EBITDA decreased to 1.8x in FY20 as against 3x in FY19.

Net D:E trend Net Debt/ EBITDA trend


Gross Block: The company incurred a capex of Rs17.1 in FY20 vs. Rs17.6 bn in FY19, a de-growth of 2.8% YoY. Gross Block stands at Rs603.3 bn in FY20 vs. Rs573.1 bn in FY19, a growth of 5.3% YoY. Fixed Asset turnover decreased to 0.7x in FY20 from 0.73x in FY19. Capex Plan: The Board of Directors had approved capex of Rs9.4 bn during FY20 for making premium products, with an increase in its grinding capacities in Bihar and West Bengal by 0.6 MTPA each and a new grinding unit of 2.2 MTPA in Odisha. While work on the projects in Bihar and West Bengal is in progress, work relating to setting up of the new grinding unit in Odisha has been put on hold in the wake of the coronavirus outbreak. With a view to conserve cash, company has reduced the overall capex cash flow plan to Rs10 bn for FY21, largely related to grinding units in eastern India, the 2nd phase of Bara Grinding Unit, Bicharpur Coal Block, ongoing WHRS, as well as other return-based capex schemes and plant maintenance and modernization capex.

0.27

0.03

0.52

0.64

0.42

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0

50

100

150

200

250


Net Debt (Rs bn) Net D:E (x)

1.2

0.2

2.2

3.0

1.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5


Net Debt/ EBITDA (x)

July 21, 2020 13

Gross Block, Capex & FA Turnover Trend


Working Capital: Trade receivables decreased to Rs22.4 bn in FY20, a de-growth of 19.7% YoY resulting in flat debtor days of 22 days. Inventories increased to Rs41.5 bn in FY20, a growth of 1.2% YoY resulting in higher inventory days of 36 vs. 32 days. Trade payables too increased to Rs35 bn in FY20, a growth of 10.8% YoY resulting in increased trade payable days of 29 vs. 24 days. Core working capital days thus decreased to 29 days vs. 30 days.

Debtor, Inventory and Creditor Days


255.0 274.1

430.5

573.1603.3

21.5 14.0 21.0 17.6 17.1

0.99

0.93

0.72 0.730.70

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

0

100

200

300

400

500

600

700


Gross Block (Rs bn) Capex (Rs bn) FA Turnover (x)

26 27

2322 22

39

3533

32

36

25 26 25 24

29

20

25

30

35

40

45


Debtor Days Inventory Days Creditor Days

July 21, 2020 14

Cash Flow: Cash flow from operations increased by 49.5% YoY to Rs89.0 bn in FY20 compared to Rs59.6 bn in FY19. Cash flow from investing decreased to (Rs41.2 bn) in FY20 vs. Rs12.7 bn in FY19 due to purchase of investments. Cash flow from financing stood at (Rs49.9 bn) in FY20 vs. (Rs67.6 bn) in FY19.

Cash Flows Trend


Dividend: Ultratech Cement declared a dividend of Rs13 per equity share on face value of Rs10 per share in FY20 vs. Rs11.5 per equity share in FY19. The cash outflow on account of dividend and dividend distribution tax amounted to Rs3.8 bn in FY20 vs. Rs3.46 bn in FY19.

Subsidiary Financials Subsidiary Financials

Particulars (Rs bn) Standalone Consolidated Difference

Revenue 400.3 414.8 14.4

Expenditure 320.0 328.4 8.4

EBITDA 80.4 86.4 6.0

Depreciation 24.6 27.0 2.5

PBIT 55.8 59.3 3.5

Other Income 13.4 13.0 -0.5

Interest 17.0 19.9 2.8

PBT 52.2 52.4 0.2

Stamp duty on acquisition of assets - -

Share in Profit / (Loss) of Associates and Joint Venture (net of tax)

- 0.0 0.0

PBT 52.2 52.4 0.2

Normalised Tax Expenses 15.7 15.4 -0.3

Reversal of Deferred Tax Liability

(18.1) (21.1)

PAT 54.6 58.1 3.5


(80)

(60)

(40)

(20)

0

20

40

60

80

100


CFO (Rs bn) CFI (Rs bn) CFF (Rs bn) FCFF (Rs bn)

July 21, 2020 15

Profit and Loss Account

(Rs Mn) FY19A FY20A FY21E FY22E

Revenue 416,088 421,248 354,206 429,276

Total Expense 342,634 328,413 284,001 338,787

COGS 267,349 245,064 208,174 252,113

Employees Cost 22,917 25,094 26,349 28,193

Other expenses 52,368 58,255 49,478 58,480

EBIDTA 73,454 92,836 70,206 90,490

Depreciation 24,507 27,022 28,052 29,008

EBIT 48,946 65,814 42,154 61,482

Interest 17,779 19,857 17,078 14,781

Other Income 4,650 6,478 8,097 8,502

Exc. / E.O. items (1,139) 0 0 0

EBT 34,685 52,423 33,174 55,205

Tax 10,681 (5,682) 9,952 16,561

RPAT 24,041 58,148 23,222 38,643

Minority Interest (31) (44) 0 0

Profit/Loss share of associates 5 0 0 0

APAT 25,174 37,054 23,222 38,643

Balance Sheet


Sources of Funds

Equity Capital 2,746 2,886 2,886 2,886

Minority Interest 122 75 75 75

Reserves & Surplus 334,760 388,269 407,738 442,053

Net Worth 337,507 391,155 410,625 444,939

Total Debt 253,370 228,979 197,979 166,979

Net Deferred Tax Liability 64,114 49,120 49,120 49,120

Total Capital Employed 655,112 669,329 657,799 661,113

Applications of Funds

Net Block 504,447 507,632 492,580 478,572

CWIP 73,720 71,620 71,620 76,620

Investments 13,862 16,618 16,618 16,618

Current Assets, Loans & Advances 173,347 197,502 179,444 201,356

Inventories 40,990 41,483 34,935 41,163

Receivables 27,870 22,383 21,349 24,698

Cash and Bank Balances 7,397 5,392 6,813 8,869

Loans and Advances 13,541 14,294 13,344 12,394

Other Current Assets 68,384 71,513 63,002 72,232

Less: Current Liabilities & Provisions 110,262 124,042 102,462 112,053

Payables 31,597 35,014 26,202 28,226

Other Current Liabilities 78,665 89,028 76,261 83,826

sub total

Net Current Assets 63,084 73,459 76,981 89,303

Total Assets 655,112 669,329 657,799 661,113

E – Estimates

July 21, 2020 16

Important Ratios

Particulars FY19A FY20A FY21E FY22E

(A) Margins (%)

Gross Profit Margin 35.7 41.8 41.2 41.3

EBIDTA Margin 17.7 22.0 19.8 21.1

EBIT Margin 11.8 15.6 11.9 14.3

Tax rate 30.8 (10.8) 30.0 30.0

Net Profit Margin 6.1 8.8 6.6 9.0

(B) As Percentage of Net Sales (%)

COGS 64.3 58.2 58.8 58.7

Employee 5.5 6.0 7.4 6.6

Other 12.6 13.8 14.0 13.6

(C) Measure of Financial Status

Gross Debt / Equity 0.8 0.6 0.5 0.4

Interest Coverage 2.8 3.3 2.5 4.2

Inventory days 36 36 36 35

Debtors days 24 19 22 21

Average Cost of Debt 7.9 8.2 8.0 8.1

Payable days 28 30 27 24

Working Capital days 55 64 79 76

FA T/O 0.8 0.8 0.7 0.9

(D) Measures of Investment

AEPS (Rs) 87.2 128.4 80.5 133.9

CEPS (Rs) 172.1 222.0 177.6 234.4

DPS (Rs) 12.0 13.2 13.0 15.0

Dividend Payout (%) 13.8 10.3 16.2 11.2

BVPS (Rs) 1169.4 1355.2 1422.7 1541.6

RoANW (%) 8.4 10.2 5.8 9.0

RoACE (%) 7.5 11.8 6.1 8.1

RoAIC (%) 8.6 10.0 6.4 9.4

(E) Valuation Ratios

CMP (Rs) 3863 3863 3863 3863

P/E 44.3 30.1 48.0 28.9

Mcap (Rs Mn) 1,115,045 1,115,045 1,115,045 1,115,045

MCap/ Sales 2.7 2.6 3.1 2.6

EV 1,345,854 1,296,196 1,266,212 1,231,156

EV/Sales 3.2 3.1 3.6 2.9

EV/EBITDA 18.3 14.0 18.0 13.6

P/BV 3.3 2.9 2.7 2.5

Dividend Yield (%) 0.3 0.3 0.3 0.4

(F) Growth Rate (%)

Revenue 34.3 1.2 (15.9) 21.2

EBITDA 19.5 26.4 (24.4) 28.9

EBIT 13.9 34.5 (36.0) 45.9

PBT 5.1 51.1 (36.7) 66.4

APAT (2.0) 47.2 (37.3) 66.4

EPS (2.0) 47.2 (37.3) 66.4

Cash Flow


CFO 59,557 89,020 59,766 69,915

CFI 12,704 (41,151) (6,515) (17,749)

CFF (67,568) (49,911) (51,830) (50,110)

FCFF 41,995 71,958 46,766 49,915

Opening Cash 2,191 7,397 5,392 6,813

Closing Cash 7,397 5,392 6,813 8,869

E – Estimates

DART RATING MATRIX

Total Return Expectation (12 Months)

Buy > 20%

Accumulate 10 to 20%

Reduce 0 to 10%

Sell < 0%

Rating and Target Price History

Month Rating TP (Rs.) Price (Rs.)

Jun-19 Not Rated 4,013 4,599

May-20# Accumulate 4,069 3,529

*Price as on recommendation date

# Analyst Change

DART Team

Purvag Shah Managing Director [email protected] +9122 4096 9747

Amit Khurana, CFA Head of Equities [email protected] +9122 4096 9745

CONTACT DETAILS

Equity Sales Designation E-mail Direct Lines

Dinesh Bajaj VP - Equity Sales [email protected] +9122 4096 9709

Kapil Yadav VP - Equity Sales [email protected] +9122 4096 9735

Yomika Agarwal VP - Equity Sales [email protected] +9122 4096 9772

Jubbin Shah VP - Derivatives Sales [email protected] +9122 4096 9779

Ashwani Kandoi AVP - Equity Sales [email protected] +9122 4096 9725

Lekha Nahar AVP - Equity Sales [email protected] +9122 4096 9740

Pooja Soni Manager - Institutional Sales [email protected] +9122 4096 9700

Equity Trading Designation E-mail

P. Sridhar SVP and Head of Sales Trading [email protected] +9122 4096 9728

Chandrakant Ware VP - Sales Trading [email protected] +9122 4096 9707

Shirish Thakkar VP - Head Domestic Derivatives Sales Trading [email protected] +9122 4096 9702

Kartik Mehta Asia Head Derivatives [email protected] +9122 4096 9715

Dinesh Mehta Co- Head Asia Derivatives [email protected] +9122 4096 9765

Bhavin Mehta VP - Derivatives Strategist [email protected] +9122 4096 9705

2,860

3,260

3,660

4,060

4,460

4,860

Jan-1

9

Fe

b-1

9

Mar-

19

Apr-

19

May-1

9

Jun-1

9

Jul-19

Aug-1

9

Sep-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan-2

0

Fe

b-2

0

Mar-

20

Apr-

20

May-2

0

Jun-2

0

Jul-20

(Rs) UTCEM Target Price

Dolat Capital Market Private Limited. Sunshine Tower, 28th Floor, Senapati Bapat Marg, Dadar (West), Mumbai 400013

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Dolat Capital Market Private Limited.

Corporate Identity Number: U65990DD1993PTC009797 Member: BSE Limited and National Stock Exchange of India Limited.

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