UltraTech Cement, which will declare its quarterly earnings on January 24, is expected to report solid growth in earnings backed by operating income and revenue, but margin may contract in Q3 on a year-on-year basis.
Most brokerages expect profit growth in the range of 37-80 percent. Reliance Securities expects maximum growth of 80 percent in Q3 profit while ICICI Securities sees 37.4 percent increase in bottomline.
Edelweiss Securities is the only brokerage which expects profit to fall 8 percent YoY as it said net profit for the quarter would not be comparable as due to the impact of the net debt increase from Binani acquisition.
The topline growth is also expected to be in double-digit led by volume growth. Brokerages largely expect revenue to grow in the range of 11-18 percent YoY with likely volume growth of more than 10 percent YoY.
"Ramp-up in the capacity utilisation of acquired assets of Jaypee (17 MT) to help the company register volume growth of 13.1 percent YoY. The impact on sales volume from Binani (6.25 MT) would be visible only from the next quarter onward," ICICI Securities said.
Binani Cement is operating at 50 percent utilisation only currently.
Emkay expects 12.3 percent YoY volume growth at 16.96 million tonne on the back of higher utilisation of JP Group's acquired assets. "Grey cement realisation is expected to improve by 6 percent YoY. Higher grey volume/realisation should result in 16.8 percent YoY revenue growth and 16.1 percent YoY growth in EBITDA."
According to Prabhudas Lilladher, blended realisations are expected to increase by 3.5 percent/Rs148 YoY to Rs 4,418 per tonne and grey cement volumes are expected to grow 11.5 percent YoY at 17.3 million tonne.
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) is also expected to grow in double digit (the range is 15-30 percent) but margin may contract in Q3 year-on-year.
"EBITDA is estimated to increase 19 percent YoY, resulting in PAT growth of 67 percent YoY," Motilal Oswal said while Reliance Securities expects 30 percent growth in EBITDA due to cost reduction and better pricing.
Key issues to watch out for
> Volume growth recovery and outlook
> Cement pricing outlook and sustainability
> Update on Jaiprakash Associates' operations
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