Release Date: October 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- UltraTech Cement Ltd (BOM:532538, Financial) reported a 3% growth in volume terms despite challenging conditions such as monsoons and pre-election slowdowns.
- The company is on track with its expansion projects, expecting to add 8 million tonnes of capacity in H2, reaching 157 million tonnes by the end of fiscal '25.
- Fuel costs have decreased, with pet coke ratios increasing to 54% and rupees per kcal dropping to INR1.84, an 8% decline QoQ.
- The company has a strong focus on efficiency improvement programs, including increasing WHRS and renewable energy capacities, which are expected to deliver cost savings.
- UltraTech Cement Ltd (BOM:532538) has a diversified presence across India, which helps mitigate regional market fluctuations and supports consistent brand positioning.
Negative Points
- Capacity utilization was at 68%, indicating underutilization due to external factors like intense monsoons.
- Employee costs saw a significant 24% QoQ increase due to one-time bonuses, impacting overall expenses.
- EBITDA per tonne is at a multi-year low, raising concerns about profitability amidst rising costs.
- The company faces potential indirect impacts from global events, such as increased ocean freight costs.
- There are ongoing regulatory processes for acquisitions, such as India Cements, which could delay integration and realization of synergies.
Q & A Highlights
Q: Could you provide an update on the expected fuel costs for Q3 and Q4?
A: Atul Daga, CFO, stated that fuel costs should drop further. The company consumes around 3 million tonnes of fuel between coal and pet coke, and the fuel mix is crucial. Pet coke usage has increased significantly, which will continue to rise, leading to a further decrease in costs.
Q: There was a sharp increase in employee costs this quarter. Is there a specific reason for this?
A: Atul Daga explained that the increase includes one-time bonuses given during the period. The average increase should be around 9% to 10%, with the rest being a one-off.
Q: Can you provide insights into the pricing trends post-quarter?
A: Prices have been improving steadily. From August to September, and further into October, prices have increased from INR 347 to INR 354. The Q2 average was INR 348.
Q: What is the status of the India Cements acquisition?
A: The CCI approval process is ongoing. The company responded to the first query list on October 12, and there might be additional queries. The closure is expected within this fiscal year.
Q: How does UltraTech maintain its realization levels compared to the industry?
A: UltraTech's strong brand positioning, quality, and extensive dealer network contribute to its ability to maintain realization levels. The company's pan-India presence helps mitigate regional price disturbances.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
