UltraTech Cement Q4 Review – Operating Leverage Gains Boost Margin: HDFC Securities

We continue to like UltraTech Cement Ltd. for its healthy margin outlook and balance sheet management.

The company’s consolidated Ebitda/adjusted profit after tax in Q4 FY22 fell 17/19% YoY (despite 10% revenue growth), owing to weak demand (till mid-February), which muted cost passthrough amid rising energy costs.

While unitary Ebitda recovered 6% QoQ (on operating-leverage gains), energy inflation pulled it down by 17% YoY to Rs 1,110/million tonne.

UltraTech Cement expects to sustain this margin in Q1 FY23 on account of its low-cost fuel inventory and healthy cost pass-through.