Ultratech Cement Q2 preview: Volumes, realization among the key factors to watch out

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

Delayed infrastructure activities post general elections, average monsoon with flood in various countries and muted volume growth limited pricing power the cement company. However, brokerages are expecting the demand to gradually increase, followed by price hikes in the second half of the current financial year.

Analysts tracking the cement sector said that Ultratech's may disappoint on a quarter-on-quarter (QoQ) basis as Q2 is a damp period for the cement player due to monsoon. Lower realization, Ebitda per tonne and dull volume growth dent the sentiments for the company, leading to a margin contraction. However, year-on-year (YoY) numbers may not be so dismal.

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

The brokerage is expecting volumes to come in at 30 million MT, rising 12.5 per cent YoY but down 6 per cent QoQ. Realization per MT is seen falling to Rs 5,492, with Ebitda per tonne coming in at Rs 786, down 17 per cent on both the comparisons. Nirmal Bang has a buy rating on Ultratech Cement.

Sharekhan pegs Ultratech's revenue at Rs 14,986 crore, falling 3.4 per cent YoY and 14.5 per cent QoQ. It sees operational margin contraction 145-331 basis points (bps) to 13.7 per cent for Q2FY25, resulting in a net profit of 884 crore, down 47 per cent QoQ and 26.6 per cent YoY.

"Volumes may grow at 4.5 per cent YoY but we expect realisations to decline by 7.6 per cent YoY. We pencil Ebitda per tonne of R.765, down 16.4 per cent YoY and 20.7 per cent QoQ. Negative operating leverage and weak realisations lead to 26.6 per cent YoY decline in net earnings," said the brokerage with a target price of Rs 13,000 and a 'buy' tag.

Axis Securities pencils revenue at Rs 15,383 crore, down 15 per cent QoQ and 4 per cent YoY. Ebitda is seen at Rs 2,342 crore, falling 23 per cnet QoQ and 8 per cent YoY, with an ebitda margins contracting 70-160 bps to 15.2 per cent for the quarter. PAT is seen at Rs 1,034 crore, crashing 39 per cent QoQ and 19 per cent YoY.

"Volume to grow on YoY basis led by new capacity ramp up but the revenues are seen lower YoY due to lower realization.. Gross margin to be higher owing to lower cost YoY. Ebitda margin to contract YoY owing to lower realization. PAT to be lower owing to lower revenue and negative operating leverage. Ebitda per tonne to be lower YoY on the back of subdued operating performance." it said.