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UltraTech Cement
hosted conference call on July 21, 2023. In the conference call the company was
represented by MrAtul Daga-Executive Director and CFO.
Key Takeaways of the call
Net Sales stood at Rs
17737 crore in Q1FY2024.
Domestic Volumes grew
by 20% YoY in Q1FY2023.
Operating EBITDA/Mt stood at Rs1,034 vs Rs1,248
in Q1FY2023 and Rs 1,060 in Q4FY2023.
Power and Fuel: The current spot price of pet coke is around
US$ 115. However spot prices of pet coke were at US$ 100 for very brief period.
On a net basis, the
company blended fuel cost was at US$ 178 per MT in Q1FY2024 when compared to
US$ 194 per MT in Q4FY2023.
Pet coke prices stood
at Rs 2.34 per kilo cal in Q1FY2024.
Depending on the
availability of pet coke the company will optimize the fuel mix. Fuel mix for
Q1 was 46% imported coal, 7% indigenous coal, 42% pet coke and 5% alternate
fuel and lignite.
If everything remains
same, the company expects fuel cost to come down by 20-30%.
The company has
increased its fuel inventory from 38 days to 58 days of stock.
RMC:The company RMC revenue grew by 37% and expects the growth to continue.
The company has 232 RMC plants and plans to take it to more than 300+ by end of
financial year.
Lead distance: the company’s lead distance has come down to 270 kms in Q1 from 281
kms in Q4FY2023.The company is practically able to serve any customer around
the country within 300 kms of its services point.
Utilization: Despite the company utilization at 90% the company will not fall short
of capacity. Across all geographies of the country capacity utilization stood
at 85%+ except South it was low.
Clincker utilization
is more than 90%+
Pricing: There is price increase in North and West in July. However, South and
east is not showing price increases. In East given the kind of growth and new
capacity addition it is difficult to increase prices.
Capacity expansion: The Company has commissioned 4.3 million capacities
till now beyond June as well. The new
capacities will strengthen the company’s position in North East and western
markets.
The company has
completed the 1st phase of expansion plans which was announced in
Dec 2020 taking the total capacity to 131.25 Million Tonnes.
The company has
identified de-bottle necking opportunities of incremental 4 Million Tonnes
which is expected to be completed in the current financial year. This is spread
across 4-5 locations and 4 MT is with respect to grinding capacity. This will
take the overall capacity from 1361.25 MT to 135.25 MT.
The company will
announce the next phase of growth in Q3 to take the total capacity above 159
MT.
Other expenses: In Q4FY2023 there was no maintenance expenses;
however, there is maintenance expenses in Q1. There no one off expenses
included in other expenses.
CAPEX: The company has spent around Rs 1796 cr on the ongoing CAPEX in
Q1FY2024.
The company will incur
total CAPEX of Rs 6000-7000 crore towards CAPEX in FY2024.
Debt: Net debt has reduced by Rs 233 cr.
Sustainable Agenda:
The company is fast
tracking its green energy program for which the company is participating in a hybrid
solar wind project of 648 megawatt, taking the company’s total renewable energy
baskets to 1.25 Giga watt by the end of the program is completed.
The company also has
an intent to increase its WHRS capacity to 425 MW from the 232 MW as on June
30,2023. The company expects both the programs to be completed by FY2026.
Once the programs are completed
the company will have 60% of the energy as green of its total energy
consumption.
TAX regime: All of the entities are under new tax regime.
Outlook:
Organic growth will
lead the growth going forward.
The company will
increase its capacity to 200 MT by 2030.
Industry volume growth
will be more than 10% and the company will be better than that.
The company expects
markets to be strong and price increase during Jan –March period of 2024.
The companies expects
improvement in EBITDA per ton on back of improved pricing, benefit from fuel
price reduction and also lower logistic cost.
This is the third year
in running witnessing high consumption of cement. Going by the healthy movement
in Q1FY2024, the company expects double digit volume growth in FY2024.
Things are going well
for the economy. FDI is gaining momentum, inflation is under control, fuel cost
for cement is on a decline, interest rate hike has taken a pause, and
infrastructure in India is improving.
Government has given a
direction to spend almost 80% of the budgeted allocation of 2.7 lakh crore by
December 2023. Almost 1 lac crore has been spent by mid-June. The balance 1.2
lac crore as advised by the ministry will be spent as per the schedule. The
government wants to achieve a speed of 40 kms
per day of road construction in this financial year.
Q1 was the highest
ever road execution in progress. It is not only roads all infrastructure
activity is progressing well. All of these will lead to healthy volume growth
for the company.
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