Ultratech Cem

No one had really expected the company to post a good set of numbers, given the seasonality of the business in Q3. The company too did not belie any expectations and posted a disappointing set of numbers.

For Q3FY14, the company posted a 38% (YoY) drop in net profit at Rs.370 crore on  a very flat net sales at Rs.4786 crore v/s Rs.4857 crore in Q3FY13. The results for the quarter have been impacted mainly on account of lower selling prices due to the subdued demand. In terms of operating costs, the company has stated that it had undertaken cost optimization measures which have helped contain the costs. Yet, overall costs are up, - total expenses rose from Rs.4072 crore to Rs. 4,267 crore, led mainly by freight costs, which was up from Rs.1059 crore to Rs.1119 crore and interest outgo rose  from Rs.52 crore to Rs.90 crore. One wonders what could have happened if the cost optimization measures had not been undertaken.

The market is more disappointed with the company’s outlook for the future wherein it has stated that things look challenging ahead. It has estimated that demand growth in the long-term is likely to be around 8% and the key demand drivers will continue to be housing and infrastructure spends.