The Q3 FY2017 results included revenue of cement plants of Jaiprakash Associates and Jaypee Cement Corp acquired in terms of a scheme of arrangement which was effective from June 29, 2017hence the figures for the three months and nine months ended 31/12/2017 are not comparable with the previous corresponding periods. As per Ind AS 103, purchase consideration has been allocated on a provisional basis, pending determination of the fair value of the acquired assets and liabilities. Further, the Company is in the process of determining the accounting treatment for certain costs incurred/ to be incurred for these assets. The Company's has completed the acquisition of Jaiprakash Associates and Jaypee Cement Corp. cement plants that has resulted it its capacity rising to 93 million metric tonnes per annum (MTPA).

The company consolidated revenue inclined 34% to Rs 8019.24 crore for the third quarter ended December 2017, due to improvement in both sales volume partially offset by drop in realization. The combined domestic cement and clinker sales volume increased 37.1% to 15.10 million tonnes (mt), while realization reduced by 13.5% to Rs 5311 per tonne.

Operating margin (OPM) decreased by 300 bps to 16.7%, as power & fuel expense inclined 370 bps to 20.2% and freight & forwarding expenses grew 90 bps to 23.6% as a percentage to sales and net of stock adjustments. As a result, the operating profit (OP) was up 13% to Rs 1337.62 crore.

Other income jumped 60% to Rs 156.16 crore. Interest cost spiked up 150% to Rs 359.26 crore. Depreciation cost jumped 48% to Rs 495.65 crore. Thus, PBT declined 20% to Rs 638.87 crore.

The tax outgo decreased by 23% to Rs 456.76 crore. The effective tax rate escalated by 270 bps to 28.5%.Thus, the PAT before MI and Share in Profit of Associates slipped 23% to Rs 456.76 crore. After accounting Rs 0.10 crore in Share in Profit of Associates and NIL Minority interest outflow, the Net Profit, as a result, declined by 23% to Rs 456.66 crore.

For Nine Months ended December 2017, Sales of the company were up 20% to Rs 21,990.04 crore. OPM declined by 130 bps to 19.8%, thus, the OP grew 13% at Rs 4,364.44 crore. Other income rose 17% to Rs 477.37 crore. After accounting for finance charges (up 88% to Rs 888.37 crore), depreciation (up 36% at Rs 1,346.99 crore) and tax expenses (down 4% to Rs 796.55 crore), the PAT before MI of the company declined 11% to Rs 1,778.42 crore. After accounting Share in Profit of Associates of Rs 0.09 crore and NIL Minority interest during period, Net Profit dropped 11% to Rs 1,778.33 crore.

Annual Financial Performance

For the financial year ended March 2017 (FY 2017), the total income from operation of the company increased 1% to Rs 28645.93 crore. OPM inclined by 90 bps to 18.2%, thus, the operating profit grew 6% at Rs 5212.44 crore. Other income rose 40% to Rs 648.12 crore. After accounting for finance cost (up 13% to Rs 640.10 crore), depreciation (down 2% to Rs 1348.41 crore) and tax expenses (up 23% to Rs 1158.55 crore), the PAT before MI and Share in Profit of Associates of the company inclined 9% to Rs 2713.50 crore. After accounting Share in Profit of Associates of Rs 0.01 crore and outgo of Rs 0.19 crore in Minority interest during period as compared Rs 0.45 crore outgo in corresponding previous period, Net Profit jumped 10% to Rs 2714.92 crore.

After successfully launching the ‘UltraTech Brand' in all the markets being served from the acquired plants, the operations are in line with the Company's ramp-up strategy. Improved capacity utilisation currently touching 60% from a low of 18% at the time of acquisition is encouraging. Substantial improvements have been carried out at these plants in terms of their operating parameters. Appointment of new dealers and retailers is an on-going program to increase the reach of UltraTech in the new markets. The acquisition is generating incremental earnings as planned and which are improving month on month.

Outlook

The Company expects government higher budget allocation for infrastructure and rural development will be the key demand drivers.

The scrip closed trading at Rs 4,408.55 (18 January 2018) on the BSE.