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UltraTech Cement, an Aditya Birla Group Company, has posted 210% jump in consolidated net profit to Rs 1,584.58 crore on 17% jump in top line to Rs 12,254.12 crore for the third quarter ended December 2020, on the back of stronger sales volume growth and operational efficiencies. The Company's reported robust operating margin (OPM) at 25.3%, a jump of 820 bps from corresponding previous quarter, driven by both revenue growth and tight cost management.
The consolidated sales volume (including overseas) inclined 14.3% to 23.88 million tonnes (mt), while realization improved 2.7% to Rs 5,132 per tonne.
Consolidated Quarterly Performance
The company consolidated revenue inclined 17% to Rs 12,254.12 crore for the third quarter ended December 2020, on the back of stronger growth in sales volume. The consolidated sales volume (including overseas) inclined 14.3% to 23.88 million tonnes (mt), while realization improved 2.7% to Rs 5,132 per tonne.
Operating margin (OPM) increased by 820 bps to 25.3%. As a result, the operating profit (OP) inclined 74% to Rs 3,094.27 crore. Other income increased 59% to Rs 267.91 crore. Interest cost was down 25% to Rs 356.27 crore. Depreciation cost shed 1% to Rs 673.91 crore. Thus, Profit Before Tax (PBT) inclined 193% to Rs 2,332 crore.
With 161% rise in net tax outflow to Rs 747.40 crore, the PAT before MI and Share in Profit of Associates gained 210% to Rs 1,584.60 crore. After accounting outflow of Rs 0.02 crore in Share in Profit of Associates and NIL in Minority interest, the Net Profit, as a result, grew by 210% to Rs 1,584.58 crore.
Nine Months ended December performance
For Nine Months ended December 2020, Sales of the company declined 4% to Rs 30,312.31 crore. OPM inclined by 440 bps to 26%, thus, OP grew by 16% at Rs 7,869.63 crore. Other income advanced 51% to Rs 681.72 crore. After accounting for finance charges (down 25% to Rs 1,108.47 crore), depreciation (down 2% at Rs 2,002.21 crore), the PBT before EO inclined 46% to Rs 5,440.67 crore.
The Company booked EO expenses of Rs 493.10 crore during the period as compared NIL in corresponding previous period. As a result, PBT after EO rose 33% to Rs 4,947.57 crore.
The tax outgo was up 38% to Rs 1,673.85 crore. The effective tax rate rose 140 bps to 33.8%. Thus, the PAT before MI and Share in Profit of Associates increased 30% to Rs 3,273.72 crore. After accounting loss of Rs 0.09 crore in Share in Profit of Associates and NIL in Minority interest, the Net Profit, as a result, increased 30% to Rs 3,273.63 crore.
Annual Financial Performance
For the financial year ended March 2020 (FY 2020), Sales of the company were up 1% to Rs 42,124.83 crore. The consolidated sales volume (including overseas) declined 3.9% to 82.33 mt, while realization increased by 5.3% to Rs 5,117 per tonne.
OPM inclined by 440 bps to 22%, thus, OP rose by 26% at Rs 9,283.57 crore. Other income advanced 40% to Rs 647.77 crore. After accounting for finance charges (up 12% to Rs 1,985.65 crore), depreciation (up 10% at Rs 2,702.16 crore), the PBT before EO inclined 46% to Rs 5,243.53 crore.
The Company booked NIL EO expenses during the period as compared to Rs 113.88 crore EO expenses in stamp duty on asset acquired in business combination (Century Textile & Industries) corresponding previous period. As a result, PBT after EO zoomed 51% to Rs 5,243.53 crore.
The taxation outgo decreased 41% to Rs 360.30 crore. Effective tax rate decreased 120 bps to 31.1%. Thus, the PAT before MI and Share in Profit of Associates dropped 38% to Rs 796.54 crore.
After accounting Rs 0.23 crore in Share in Profit of Associates and NIL in Minority interest, the Net Profit, as a result, declined by 38% to Rs 796.31 crore.
Normalised profit, which excluded the benefit of reversal of Deferred tax liabilities (DTL) of Rs. 2112 crore due to change in tax regime (34.944% to 25.168%), stood at Rs 1,117 crore, up 9% from corresponding previous period.
Corporate Developments
During the quarter, the Company board approved capex of Rs 5477 crore towards increasing the Company's capacity by 12.8 mtpa with a mix f brown field and green field expansion. The additional capacity is being created in the fast-growing markets of the east, central, and north regions of the country. This expansion is in addition to the Company's 6.7 mtpa capacity addition that is currently underway in Uttar Pradesh, Odisha, Bihar, and West Bengal, which has picked up pace and is expected to get commissioned by FY22, in a phased manner.
Acquisition update
The 14.6 mtpa cement plants acquired during the previous financial year have been making good progress on integration with production ramped up to nearly 84% toward the exit of Q3. The timely acquisition has enabled the Company to meet the growing demand in the central and east markets.
Outlook
The Company continues to closely monitor the impact of COVID-19 on its operations, its capital, and financial resources remain entirely protected and its liquidity position is adequately covered. With strong rural growth, revival in manufacturing sentiment, buoyancy in GST, and tax collections, the Company expects demand to grow on the back of the Government's push on infrastructure projects. Given its Pan-India presence, UltraTech is well positioned to support the rising demand for cement in the country.
The scrip closed trading at Rs 5,531.15 (22 January 2021) on the BSE.
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