InvestorQ : Why has Ultratech, the largest cement company in India, been lagging other cement companies in performance?
Arya Nanda made post

Why has Ultratech, the largest cement company in India, been lagging other cement companies in performance?

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Deepa Salunkhe answered.
8 months ago
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Ultratech Cements, part of the Aditya Birla group, may have reported optically good numbers for the Mar-20 quarter but the stock has lagged other cement stocks. There appears to be a logical reason behind this underperformance. On a YOY basis, the volumes of Ultratech fell by 16% due to lower capacity utilization at its plants in central India. Its predominant exposure to the Mumbai and Gujarat markets also weighed against the company. Ultratech’s volume decline has been the sharpest among the large cement stocks. There is another problem too for Ultratech. Apart from lower volumes, Ultratech also had the lowest growth in EBITDA (earnings before earnings, taxes, depreciation and amortization). While Shree Cements led the pack with 35% growth in EBITDA, even ACC and Ambuja saw EBITDA growing by 27%. In the case of Ultratech, the EBITDA growth was just about 14%. A lot will depend on how Ultratech is able to get out of the huge debt pile that it added in the last couple of years to bank roll its acquisitions.

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