Q2FY18 revenue rose 22% y-o-y to Rs 65.7 billion, as volumes grew 18% y-o-y due to acquisition of JPA assets. Volumes rose 18 % y-o-y to 13.14mt. Blended realisation increased 4% y-o-y to Rs 5,001/tonne due to healthy pricing in its focus markets. Grey cement realisations rose 7% y-o-y to Rs 4,452/tonne due to improved pricing across most markets. Power and fuel cost per tonne rose 14% y-o-y due to the impact of higher petcoke and coal prices. Freight cost increased 4% y-o-y due to a 7% y-o-y rise in diesel prices, partially offset by lead distance reduction.
EBITDA thus increased 24% y-o-y to Rs 13.5 billion, translating into EBITDA/tonne of Rs 1,028 and margin of 20.6%. Rebranding exercise for acquired assets is complete, with pricing at par with UTCEM. Petcoke has been consumed at the rate of $90/tonne v/s spot rate of $105/tonne. Industry growth for Q2FY18 would be in low-single-digit. Grey cement realisations were flat q-o-q.
While in the short-term, the acquisition of JPA would be earnings-dilutive, we believe addition of 31% of present capacity at virtually zero lead time is critical for a large-scale player like UTCEM to retain market share. Expanded capacity would give it an edge, when there is an upturn. We value the stock at FY20E EV/EBITDA of 14x. Our TP of Rs 4,906 implies 20% upside.
Volumes for 2QFY18 increased 18% y-o-y to 12.84 mt due to the ramp-up of JPA assets. Volumes (including white cement and putty) increased to 13.14 mt. Pricing improvement was better than expectation at Rs 5,001/tonne q-o-q due to firm prices across most of its focus markets. Grey cement realisations were flat q-o-q. Thus, revenue for Q2FY18 increased 22% y-o-y to Rs 65.71 billion.