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UltraTech Cement, an Aditya Birla Group Company, has posted 55% jump in consolidated net profit to Rs 898.83 crore on 8% jump in top line to Rs10,354.21 crore for the second quarter ended September 2020, on the back of stronger sales volume due to its ability to serve all India markets and operational efficiencies. The Company's reported robust operating margin (OPM) at 26%, a jump of 610 bps from corresponding previous quarter, driven by both revenue growth and tight cost management.
The consolidated sales volume (including overseas) inclined 18.7% to 20.06 million tonnes (mt), while realization dropped by 9.3% to Rs 5,162 per tonne.
Consolidated Quarterly Performance
The company consolidated revenue inclined 8% to Rs 10,354.21 crore for the second quarter ended September 2020, on the back of stronger sales volume due to its ability to serve all India markets. The consolidated sales volume (including overseas) inclined 18.7% to 20.06 million tonnes (mt), while realization dropped by 9.3% to Rs 5,162 per tonne.
Operating margin (OPM) increased by 610 bps to 26%. As a result, the operating profit (OP) inclined 40% to Rs 2,694.90 crore. Other income fell 8% to Rs 134.89 crore. Interest cost was down 30% to Rs 356.82 crore. Depreciation cost rose 1% to Rs 672.42 crore. Thus, Profit Before Tax (PBT) before EO inclined 102% to Rs 1,800.55 crore.
The Company booked Rs 335.73 crore EO expenses during the period as compared to NIL EO expenses corresponding previous period. As a result, PBT after EO gained by 65% to Rs 1,464.82 crore.
With 55% rise in net tax outflow to Rs 566.15 crore, the PAT before MI and Share in Profit of Associates gained 55% to Rs 898.67 crore. After accounting inflow of Rs 0.16 crore in Share in Profit of Associates and NIL in Minority interest, the Net Profit, as a result, grew by 55% to Rs 898.83 crore.
Half yearly performance
For half year ended September 2020, Sales of the company declined 14% to Rs 17,987.96 crore. OPM inclined by 340 bps to 26.5%, thus, OP fell by 2% at Rs 4,769.48 crore. Other income advanced 47% to Rs 413.72 crore. After accounting for finance charges (down 26% to Rs 749.84 crore), depreciation (down 3% at Rs 1,318.60 crore), the PBT before EO inclined 12% to Rs 3,114.76 crore.
The Company booked EO expenses of Rs 493.10 crore during the quarter. As a result, PBT after EO fell 6% to Rs 2,621.66 crore.
The tax outgo was flat Rs 926.45 crore. The effective tax rate rose 220 bps to 35.3%. Thus, the PAT before MI and Share in Profit of Associates fell 9% to Rs 1,695.21 crore. After accounting loss of Rs 0.07 crore in Share in Profit of Associates and NIL in Minority interest, the Net Profit, as a result, declined 9% to Rs 1,695.14 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.
Acquisition update
The 14.6 mtpa cement plants acquired during the previous financial year have been integrated and now the company is investing in improving operations further.
Outlook
The Company's UltraTech expects demand for cement to grow on the back of Governments thrust on infrastructure and the expanding rural economy. The recent policy measures announced by the Reserve Bank of India to support the real estate sector will also aid demand. Given its Pan-India presence, UltraTech is well positioned to benefit from demand recovery across the markets. UltraTech continues to remain committed to all its business associates.
The scrip closed trading at Rs 4,629.60 (21 October 2020) on the BSE.
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