Cement stks extend gains on strong performance by sector majors in June qtr

Shares of cement makers ongoing on an upward trajectory and attained up to 4 per

Shares of cement makers ongoing on an upward trajectory and attained up to 4 per cent in an in any other case subdued sector on Wednesday, immediately after sector majors UltraTech Cement, ACC, and Ambuja Cements described strong operational performances in the April-June quarter.

JK Lakshmi Cement, UltraTech Cement, HeidelbergCement India, Dalmia Bharat and JK Cement ended up up in the array of two per cent to 4 per cent on the BSE. In comparison, the S&P BSE Sensex was down .39 per cent or 152 factors at 38,341 at 10:fifty three am.

UltraTech Cement was up 4 per cent to Rs 4,286, surging eleven per cent in the earlier two buying and selling times, immediately after the enterprise sent big conquer on Ebitda (earnings right before fascination, taxes, depreciation, and amortization) amount led by value optimization and pricing tailwinds.

The enterprise explained it described a consolidated Ebitda of Rs two,353 crore for the quarter. Analysts, on an common, experienced expected Ebitda of Rs 1,702 crore. It also clocked its maximum ever Ebitda/t of Rs 1,416, up 24 per cent sequentially, pushed by lower-than-expected charges.

“The ‘overheads manage programme’ initiated by the administration assisted to minimize mounted charges by 21 per cent yr on yr (YoY). Prudent functioning cash administration and manage on hard cash flows are mirrored in a reduction of web personal debt by Rs two,209 crore through Q1FY21,” Ultratech Cement explained in a press launch.

“Driven by strong pricing state of affairs submit peace of lockdown and exceptional value administration by UltraTech Cement through Q1FY21, we have upgraded EBITDA estimates for FY21E/FY22E by 10.three per cent/two.1 per cent respectively. Even so heading forward, we expect the tempo of personal debt reduction to gradual down and estimate incremental web personal debt reduction of Rs six,900 crore about future seven quarters (by FY22E),” analysts at Of course Securities explained in consequence report.

“UltraTech Cement’s sector blend has improved submit acquisitions, with the much better marketplaces of northern/central India contributing 45 per cent to volumes. The valuation is acceptable at eleven.2x FY22E EV/EBITDA and USD146/t of capacity, a 35 per cent price reduction to the earlier 5-yr common and twenty per cent price reduction to the earlier 10-yr common. The inventory is also buying and selling 35 per cent much less expensive than peer Shree Cement v/s the historic common of 10 per cent,” Motilal Oswal Securities explained in benefits update.

In accordance to analysts at Emkay World-wide Economic Expert services, cement price ranges have risen six per cement quarter on quarter (qoq) in Q1FY21, with selling price hikes across areas (4-six per cent qoq in all areas other than the South location where by price ranges greater 13 per cent qoq).

Inspite of some drop in cement price ranges in Jul’20, latest price ranges are 4-4.five per cent above estimates. The brokerage agency has factored in a 19 per cent yoy drop in cement demand in FY21E but the recovery in cement demand in marketplaces such as North, Central and East has shocked positively. “Higher cement price ranges and greater-than-approximated demand may possibly trigger earnings enhance for providers below coverage,” it explained.