Ultratech Cement

1. Overview of Ultratech Cement

 UltraTech Cement Ltd is the largest manufacturer of grey cement, ready mix concrete (RMC) and
white cement in India. It had headquarters at Mumbai.
 With 100+ Ready Mix Concrete (RMC) plants in 35 cities, UltraTech is the largest manufacturer
of concrete in India.
 Highest market capitalisation in India’s cement industry
 UltraTech Concrete receives -Innovation for Sustainability- Award at the Economic Times
Innovation Awards

2. Capital Structure
2019 2018 2017 2016 2015

Total Shareholders Fund 118637.56 108470.95 109526.83 87438.57 79030.01

Long Term Debt 19551.16 15863.47 6370.84 4896.59 4992.66

D/E 0.1647974 0.14624625 0.05816694 0.05600034 0.06317423

Share Price 4320.22 3950 3988.45 3184.1 2877.9

Chart Title
140000.00

120000.00

100000.00

80000.00

60000.00

40000.00

20000.00

0.00
2019 2018 2017 2016 2015

Total Shareholders Fund Long Term Debt

  From the above given table and chart, we can see that Ultratech likes to keep debt in its
capital structure and enjoy tax shield. Also, it helps increase the value of the firm.
 Ultratech is into acquisitions of other companies and to fund those acquisitions they
take debt rather than issuing equity which is costly compared to getting debt.
 In 2015, they increased their debt to acquire the Gujarat units of JCCL.
 In 2016, they repaid some of their long-term debt and did not get any new debts. So,
the debt is less compared to previous year.
 In 2017, they took a debt around Rs.2000 crores by issuing non-convertible debentures.
With that money they invested in their own power plants and purchased some
investments.
 In 2018, they took a debt around Rs.10,000 crores to acquire JAL (JaiPrakash
Associations) and in 2019, they again took debt around Rs.4000 corers to repay some of
the debt they took for the JAL acquisition.

Ultratech
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2019 2018 2017 2016 2015

 The above given table shows the trend of their share price which keeps on increasing over the
years.
 In 2018, there is a drop in their share price because there was a marginal decline in the net
profit compared with the previous year.
 3. Dividends of Ultratech

Announcement Date Ex-Dividend Date Record Date Dividend

24-04-2019 10-07-2019 12-07-2019 11.50

25-04-2018 10-07-2018 12-07-2018 10.50

25-04-2017 10-07-2017 12-07-2017 10.00

25-04-2016 04-07-2016 06-07-2016 9.50

27-04-2015 14-08-2015 16-08-2015 9.00

2019 2018 2017 2016 2015

EPS 88.65 80.92 98.9 90.3 76.47

Dividend Per
Share 11.5 10.5 10 9.5 9

Dividend Pay-
out Ratio 0.14096 0.12315 0.11869 0.10402 0.12534

Dividend Yield 0.01113 0.01093 0.01125 0.01188 0.01297

 The company has a policy of paying 10-20% of net income as dividend and by looking at the
dividend pay-out ratio given in the above table it is visible that the company is maintaining their
policy.
 Their EPS is also rising over the years except in 2018. That is because in 2018, their net income
reduced. This is because, they paid the pending stamp duty charges on tax for some of the
assets they acquired, and they also included their depreciation in the net income.
 Even though their earnings reduced in 2018, they did not reduce their dividend as it will send
negative signal to the market. Also, their earnings reduced not because of their performance but
because of the assets they acquired.
 By paying regular dividends, the firm is increasing the value of their shareholders thereby
increasing the value of the firm.
 Overall, when we look how it is related with the capital structure, there we can see that as the
debt increases and they are investing in projects and earning profits, it is increasing
shareholders value directly.

4. Shareholding Pattern
 Chart Title
180,000,000
160,000,000
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
2019 2018 2017 2016 2015

Promoter Holding Institutional Holding Public Holding

2019 2018 2017 2016 2015

Promoter 16,66,70,91 16,74,59,59 16,87,66,75 16,78,92,73 16,92,77,87

Holding 4 9 3 7 4

Institution
al Holding 7,64,46,977 7,71,15,226 7,53,51,404 7,16,49,417 7,02,36,652

Public
Holding 2,69,24,479 2,55,34,947 2,67,37,484 2,67,37,484 3,21,91,651

 The above given table and the graph shows the shareholding patterns for the last 5
years.
 There is no major changes occurred in the pattern except for the promoter holding
reduced over the years.
 That is because of Trapti Trading & Investments and Turquoise started selling their
shares and by end of 2019 they sold all their shares.

5. Working Capital
 From the below given table we can see that value of the working capital is always
negative except for 2017.
 As the firm takes debt for its expansion each year there is a long-term debt that gets
matured and increases the current liability each year.
 Because of this their working capital is negative.
 But in 2017, they did not have any long-term debt that got matured and their current
investments rose. This is because they purchased some mutual funds to get returns in a
short time.
 2019 2018 2017 2016 2015

CA 11,478.72 10,585.61 12,475.05 9,191.00 7,912.42

CL 11,863.25 11,042.27 8,058.40 11,209.03 8,786.81

Working
Capital -384.53 -456.66 4416.65 -2018.03 -874.39

2019 2018 2017 2016 2015

DSI 56.37675 66.70089 61.54673 63.05628 77.12358

DSO 21.44385 21.00305 19.49662 21.78242 19.14724

DPO 45.70146 50.39998 47.40641 43.78317 76.77488

CCC 32.11913 37.30396 33.63694 41.05553 19.49594

 Their DSI is keep on decreasing over the years which is a good sign. DSI tells you how
many days a firm is taking to convert their raw materials to finished goods and sell it.
 Except in 2018 their DSI rose and that is because the demand for cement reduced
average 3% of first and second quarter of the year.
 DSO tells you how many days a firm takes to receive cash for their credit selling. They
maintain their DSO around 20 days.
 DPO tells you how many days a firm takes to repay for their credit purchases. By looking
at their DPO it is visible that the creditors is not flexible and they do not give any
relaxation to the firm to repay their purchases.
 Overall their cash conversion cycle is getting reduced despite the firm’s creditor having a
very tight credit policy.