UltraTech Cement has undertaken series of acquisitions and organic expansions over the past year. This will help the country's largest cement manufacturer in enhancing market share, getting greater control on setting prices and achieving higher sales and volumes growth, claims the Economic Times-Bangalore.
UltraTech's capacity has increased to 92.3Mta from 63.2Mta in FY15. This includes the recent acquisition of 22.4Mta of cement capacity from JP Associates including access to the 40 years of limestone reserves that JP Associates had. Due to the acquisition, the company will not only improve its presence in the northern region but also get entry into the central region, says the Economic Times. The company's all-India market share is now 22 per cent.
With enhanced market share and pan-India presence, UltraTech can emerge as a better price-maker in key markets, says the Economic Times. The company's operating profit before depreciation (EBIDTA) per tonne is 60 per cent more than peers'. In addition, the cost of per tonne cement for UltraTech is one of the lowest. Due to these factors, it can push for volumes growth and also increase realisations by in creasing prices to make the most of demand growth, adds the Economic Times.
Post the acquisition of cement assets of JP Associates, the company's net debt-to-equity is well within acceptable limits of one. On the valuation front, considering FY17 estimates, the company's stock commands price-earnings multiple (P/E) of 32.2 compared with the FY15 P/E of 44.1.
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