InvestorQ : Why did Ultratech see such a sharp fall in profits for the September 2022 quarter?
rhea Babu made post

Why did Ultratech see such a sharp fall in profits for the September 2022 quarter?

Answer
image
Riya Dwivedi answered.
1 month ago
Follow

For the quarter ended September 2022, Ultratech reported 15.6% growth in sales at Rs13,893 crore on a consolidated basis. However, high frequency pressure was visible in fall in revenues on sequential basis. Numbers were tepid due to extended monsoons and normally the second quarter is a weak period for cement demand. Ultratech operated in the quarter at capacity utilization of 76% compared to 71% in the year ago period. Domestic sales volumes showed robust growth of 9.6% yoy, despite the monsoon delays. Currently, Ultratech has cement manufacturing capacity of around 122 MTPA globally and that is likely to expand to 131.25 MTPA by the start of the next fiscal year. Here is a gist of the numbers.

Ultratech Ltd

Rs in Crore

Sep-22

Sep-21

YOY

Jun-22

QOQ

Total Income (Rs cr)

₹ 13,892.69

₹ 12,016.78

15.61%

₹ 15,163.98

-8.38%

Operating Profit (Rs cr)

₹ 1,944.98

₹ 2,763.86

-29.63%

₹ 3,184.44

-38.92%

Net Profit (Rs cr)

₹ 755.73

₹ 1,313.53

-42.47%

₹ 1,584.08

-52.29%

Diluted EPS (Rs)

₹ 26.20

₹ 45.52

₹ 54.91

OPM

14.00%

23.00%

21.00%

Net Margins

5.44%

10.93%

10.45%

  

Let me now turn to the profit story and why the profits fell so sharply in the case of Ultratech. For instance, if you look at the Q2FY23 quarter ended September 2022, the net profits were lower by -42.5% at Rs756 crore. This was on account of a sharp spike in the cost of power and fuel as well as a rather steep spike in the cost of freight and transport. The total energy costs comprising of power and fuel costs were up 58% yoy. As a result, there was a sharp fall in the operating margins, although the enhanced capacity utilization partially compensated and enabled Ultratech to take on competition more effectively. Net margins for Q2FY23 was relatively tepid at 5.44% compared to 10.93% in the year ago period of Q2FY22 and 10.45% net margins reported in the sequentially previous quarter.

4 Views