UltraTech disappoints streets; Q4 net down 16.2%

Stocks of the company declines 2.5% as bottom as well as top-line fall short of estimates

UltraTech Cement, India's largest cement maker with a capacity of 52 million tonne per annum (mtpa), could not rise up to the expectations of industry's analysts as it disappointed street with its dismal performance for the quarter ended March, 2013.

Given the poor demand for the building material during this period, analysts already had conservative estimates for the company and the sector, in general. However, the company fell short against estimates, though marginally.

The Aditya Birla group's cement giant, which is among world's top ten cement manufacturers, posted a decline of 16.28% in its profitability during January-March quarter at Rs 726.2 crore compared with Rs 867.32 crore in the previous corresponding period. Sector's experts had estimated net profits to be around Rs 730-750 crore.

Such a shortfall in profits was enough for the company's stocks to see an erosion of 2.5% in the value or a drop of Rs 48.60. Though, during the trading session on Monday, the counter dipped to as low as 3.5% before settling down at Rs 1878.75 at the close on the BSE.

Not only the bottom-line, but the company also failed to meet up the top-line expectations during the quarter. The net sales for the period stood at Rs 5,389 crore, up a little over 1%; though analysts estimated the top-line numbers to be in the range of Rs 5,400 crore to Rs 5,700 crore.

Hit by high input, freight expenses and on top of it flat cement sales, UltraTech Cement turned out to be a victim of poor dynamics prevailing in the sector for quite some months now. It is interesting to note that March quarter, generally, has been the best quarter for the industry owing to peak construction phase. However, this year it turned out to be opposite.

During the quarter, UltraTech sold 11.13 mt of cement registering a flat growth (yo-y) while its input costs and freight expenses jumped 13.6% and 9.6%, respectively.

For the financial year ended March, 2013, company's consolidated net profits were up 11.4% to Rs 2,677 crore against Rs 2,403 crore. However, this could not uplift sentiments on the counter. Its consolidated net sales for the year were up 10.9% at Rs 21,156 crore compared with Rs 19,077 crore in the previous financial year.

Shares of UltraTech's peers in India - ACC and Ambuja too traded weak on a day when benchmark indices were up a little less than one percentage point. Shares of ACC, which traded weak for most of the day, closed marginally up at 1,214.35 or 0.13% while those of Ambuja Cements closed weak at Rs 187.9, down 0.45% on the BSE.