Ultratech Cem

The stock was amongst the top losers of the day yesterday on the BSE and this was thanks to the poor performance for Q4FY13.  The company, on a YoY, announced a 16% drop in net profit at Rs.726 crore and this was on a set of flat net sales for the quarter at Rs.5389 crore. The combined cement and clinker sales of grey cement was almost flat at 11.13 MMT, while for white cement was at 1.56 LMT (1.63 LMT). This plus higher operating costs, and a much higher tax outgo pushed down the bottomline. The higher tax is due to the increased surcharge in IT as proposed in the Budget FY13-14. Also during the quarter, working at its Awarpur plant in Maharashtra was temporarily suspended due to labour strife.

During the quarter, various of its ongoing projects were commissioned, taking the total cement capacity of the company from 48.75 million metri tonne to 50.50 mmt. Its clinkerisation plant of 3.30 mmt in Karnataka is expected to go on stream in Q1FY14. By the end of March 2015, the company’s cement capacity is expected to rise to 61.45 mmt.  More than the performance what really spooked the market was the news that it plans to cut its capex by 50% over the next 12 months compared to Rs.4430 crore spent last fiscal. This reflects the build up of excess capacity in the economy while the demand for housing remains tepid and infra build remains slow.