Commenting on the same, Amar Ambani, Head of Research, IIFL, said, “Ultratech revenue for Q2 FY16 grew by 4.4%yoy to Rs. 5,621cr marginally above our estimates of 2% yoy growth while, operating margins for UCL stood at 17.4%, a jump of 125bps (our estimate was 90bps increase). Ultratech Cement balance sheet continues to be strong supporting its ongoing expansion plans with debt/equity at 0.24x. We factor in a lower dispatch growth in FY16/17 as water scarcity in Q4 FY16 and Q1 FY17 will impact infrastructure activity and thereby cement demand. We believe, operational efficiency will improve in FY16 and FY17 on back of softening in power and fuel prices but is likely to be lower than earlier estimated. Return ratios, are unlikely to improve in FY16/17 period. We maintain Reduce rating on Ultratech Cement.”
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