UltraTech: Concrete numbers

Higher despatches and better realisations boost March qtr

UltraTech Cement, like other players in the sector, reported an improved performance in the March 2007 quarter, thanks to higher despatches and better price realisations on a y-o-y basis.

As a result, operating profit improved an impressive 90.6 per cent y-o-y to Rs 408.5 crore in the last quarter, while its net sales grew 38.2 per cent to Rs 1465.5 crore.

Operating profit margin also grew 770 improved basis points y-o-y to 27.9 per cent in the last quarter. Other player, ACC's operating profit margin also improved 600 basis points y-o-y to 30.3 per cent in the last quarter.

Meanwhile, UltraTech's aggregate sales volume was 5.04 million tonne in the last quarter, a rise of 8.85 per cent y-o-y. Its realisations were estimated at Rs 2,907 per tonne in the March 2007 quarter, a 27 per cent increase.

Meanwhile, ACC's realisations were estimated at Rs 3,317 per tonne in the last quarter, a growth of 26.8 per cent y-o-y. Going forward, UltraTech's captive power plants at its facilities at Gujarat, Chhattisgarh and Andhra Pradesh are expected to be commissioned in CY08, which should keep power costs in check in the medium term.

At Rs 800, the stock trades at 11 times estimated FY08 earnings and leaves little room for further upside, given the cement industry's earlier decision to hold prices for a year.

BASF India: Rising costs

Speciality chemicals and agrochemicals manufacturer BASF India's performance in the March 2007 quarter was adversely affected by a rising operational cost structure, mainly on account of raw materials.

The company's operating profit declined 20.5 per cent y-o-y to Rs 8.27 crore in the last quarter, while its net sales expanded 10.75 per cent to Rs 160.7 crore. Operating profit margin also declined 200 basis points y-o-y to 5.1 per cent in Q4 FY07.

This pressure on margins was owing to adjusted raw material costs as a percentage of net sales rising 420 basis points y-o-y to 58 per cent in the last quarter.

Analysts highlight that the company uses a range of inputs derived from petroleum products which led to higher raw costs in the last quarter. In FY07, the company's consolidated operating profit margin declined 240 basis points y-o-y to 10.7 per cent.

Meanwhile, in its key performance products division, which comprises tanning agents and textile chemicals, BASF's segment profit declined 32.1 per cent y-o-y in the March 2007 quarter.

Global crude oil prices have gone up sharply over the past few weeks and it is expected to once again raise the company's raw material costs. As a result, at Rs 258, the stock is priced at 14 times FY07 earnings and is unlikely to outperform the broad market.