Basic Analysis of Ultratech Cement

Basic Analysis of Ultratech Cement: Building infrastructure requires a proper foundation and cement plays an important role in construction. Cement is a binder that uses water to combine various materials to create strong structures.

This material is beneficial because it is easier to construct and requires less maintenance. In India, the growing population tends to spend more on building houses and other structures that meet their needs as their disposable income increases. This trend is likely to increase as governments increase spending. In this article, we will look at Ultratech Cement, which operates in the cement sector.

Fundamental Analysis of Ultratech Cement – ​​Company Overview

Ultratech Cement It was founded by Kumar Anglam Birla in 1983. In 1998, they merged the cement businesses of Indian Rayon and Grasim. In late 2004, L&T and Aditya Birla Group agreed to sell L&T Cement, which helped expand production capacity. In late 2009, L&T sold its remaining stake. In 2013, it acquired the cement business of Jayaprakash Group for Rs. Planned for additional expansion of KRW 380 billion

The company’s product line includes Portland Pozzolana Cement, Portland Blast Furnace Slag Cement, and Conventional Portland Cement. Plain Portland cement is used in a variety of applications, including plastering, masonry, and concrete products. The company’s customers are in the building and construction sector.

The manufacturing facility consists of 24 integrated production units, 30 crushing units, 8 bulk packaging terminals and 1 clinkerization facility. UltraTech operates 270 Ready Mix Concrete (RMC) units across 125 locations, making it India’s largest concrete manufacturer.

UltraTech, which operates under the Birla White brand, is the market leader in white cement in India. UltraTech includes one white cement unit and three wall care putty units. They created the concept called UltraTech Creating Solutions (UBS) to provide individual home builders with a one-stop shop for home construction. There are over 3,600 Ultratech Building Solutions (UBS) stores across 22 states in India.

segment analysis

Ultratech Cement’s revenues are derived solely from its cement and cement-related products business. Manufactured goods sales generated 90.85% of revenue in FY23. Sales of traded goods accounted for 7.71%. The remaining 1.44% of revenue comes from other operating revenues, including scrap sales, lease rentals, insurance claims, government subsidies and some other income.

They earn most of their revenue 96.95% from India and the remaining 3.04% from overseas. However, domestic sales increased by 22.15% compared to the same period last year, while other sales decreased by 14.90%.

Industry Overview

The Indian government is increasing facility investment. India is the world’s second largest cement producer. The production capacity of India’s cement business is expected to grow at a compound annual growth rate (CAGR) of 4-5% over the next four years till fiscal 2027.

Therefore, the installed capacity will start at 715-725 MT per annum in early fiscal 2028. It is expected that 450.78 million tonnes of cement will be utilized by the end of FY27. Prime Minister Narendra Modi unveiled “PM Gati Shakti – National Master Plan (NMP)” for multi-modal connectivity in October 2021.

Together, Gati Shakti will build an efficient, first-class intermodal transport network in India. This will increase cement demand in the future. The government is investing heavily in smart cities and urban development. infrastructureThe real estate market is booming.

Also read…

Fundamental Analysis of Ultratech Cement – ​​Finance

Sales and Net Profit

In FY23, Ultratech’s operating revenue was Rs. 63,2369.98 crore, an increase of 20.23% from Rs. 52,598.83 crore. Net profit recorded 140 million won. 5,073.40 crore in FY23 compared to Rs. 7,334.26 crore, a decrease of 30.82%.

The company’s profits are growing. However, net income has been fluctuating and FY23 profits were down. There was an exceptional income of 5 million won. 159.92 crore. In FY23, continuing operating profit declined by 29.28% year-on-year.

profit

The company’s OPM stood at 17.45% in FY23 compared to 22.64% in FY22. NPM was 7.96% in FY23 compared to 13.51% in FY22.

Both ratios declined in FY23. OPM was impacted by increased power and fuel costs, amounting to 29.23% of FY23 revenue and 23.07% of FY22 revenue. This increase also impacted net profit margins. The margin in FY22 was 13.51% and declined significantly in FY23. Other income contributes around 10% to FY23 net profit.

rate of return

Operating in the Construction segment, Ultratech Cement’s RoE decreased from 15.50% to 9.69% in FY23. RoCE was 12.77% in FY23, down from 14.62% in the previous year.

RoE decreased in FY23 and additional return on capital also decreased from FY22 to FY23. RoCE showed a similar trend as RoE, but the company maintained a range between 9 and 15% over the five-year period.

debt analysis

Ultratech’s debt to equity ratio was 0.21 in FY23 and 0.35 in FY22. The interest coverage ratio was 10.01 times in the 23-year flat compared to 10.02 times in 2022. The company’s debt-to-equity ratio is low and has been decreasing over the past five years. Minimal debt can help you reduce your business. interest cost.

This can be seen in the interest coverage section, where the ratio remains unchanged despite a decrease in profits due to a decrease in interest expenses. Low debt can improve cash flow and allow for further expansion planned through internal accruals in the future.

Fundamental Analysis of Ultratech Cement – ​​Key Indicators

The main indicators of Ultratech Cement are:

Fundamental Analysis of Ultratech Cement – ​​Future Plans

• Ultratech is seeking a three-stage expansion of 21.9 million tonnes capacity. Construction has begun and is underway. It is scheduled to be completed by 27.
• The initial capital expenditure cash flow for FY24 is expected to be around Rs. 900 billion won.
• The 25-year facility investment is expected to be around 100 billion won. $900 billion
• The company plans to achieve zero net debt by the end of March 2025.
• Green energy utilization targets solar utilization of approximately 85% and 34% by 2030, respectively.
• Future expansions include WHRS and zero heat consumption.

Read more: Pharmaceutical stocks with high dividend yield

conclusion

To conclude the article, let’s take a brief look at Ultratech Cement. The company is benefiting from investments promoted by the government. Cement production is one of the causes of global warming. Companies are also looking for opportunities to improve quality.

Company revenues are increasing and profits are based on control costs. Debt is low and returns are decent. What do you think about the company’s potential? Let us know in the comments section below.

Written by Santosh

By leveraging the Stock Screener, Stock Heatmap, Portfolio Backtesting and Stock Comparison tools on the Trade Brains portal, investors have access to comprehensive tools to identify the best stocks, stay updated and informed with stock market news. invest.

---

Start your stock market journey now!

Want to learn stock market trading and investing? Check out exclusive stock market courses from FinGrad, a learning initiative from Trade Brains. You can sign up for free courses and webinars from FinGrad and start your trading career today. Sign up now!!