Ultratech Cement (NSE: ULTRACEMCO) – Insights from management
UltraTech Cement is engaged in the manufacturing and selling of Cement and Cement related products.
After a nearly flat FY20, demand has picked up since Dec’19 which gives hope of volume growth recovering to 6-7% in FY21. Demand is doing best in East and West India while South India has the worst growth numbers. The company is falling short of capacity in the East and it will get resolved when its 3.4mtpa capacity gets commissioned in the next 12-15 months.
The company is looking to divest its non-core assets which is expected to fetch around Rs.1000 Cr. Management continues to focus on deleveraging and has reduced debt by 15% in FY20 YTD and will further reduce net debt to Rs.12500 Cr. in FY21.
Putty demand has been growing in double digits and there plans to expand its putty capacity, which should get commissioned in 1HFY22. Company is also trying to increase sales of premium cement to improve margins.
Valuation is also supportive at 12.1x FY21E EV/EBITDA, at ~20% discount to its 5- year average and marginal 5% discount to 10-year average.' -