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    Ultratech Cement 1. Overview of Ultratech Cement: Chart Title

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    ashuuu
    Ultratech Cement is the largest cement manufacturer in India with over 100 RMC plants. It maintains a debt-to-equity ratio of around 0.15 to take advantage of tax benefits of debt. It uses debt to fund acquisitions like buying JAL Cement in 2018. It pays regular dividends of 10-20% of profits each year to increase shareholder value. Promoter shareholding has reduced in recent years as some promoters sold shares. The company has a negative working capital due to maturing long-term debt increasing current liabilities.

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    Ultratech Cement 1. Overview of Ultratech Cement: Chart Title

    Uploaded by

    ashuuu
    58 views5 pages
    Ultratech Cement is the largest cement manufacturer in India with over 100 RMC plants. It maintains a debt-to-equity ratio of around 0.15 to take advantage of tax benefits of debt. It uses debt to fund acquisitions like buying JAL Cement in 2018. It pays regular dividends of 10-20% of profits each year to increase shareholder value. Promoter shareholding has reduced in recent years as some promoters sold shares. The company has a negative working capital due to maturing long-term debt increasing current liabilities.

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    Group 5 Final report

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    Ultratech Cement is the largest cement manufacturer in India with over 100 RMC plants. It maintains a debt-to-equity ratio of around 0.15 to take advantage of tax benefits of debt. It uses debt to fund acquisitions like buying JAL Cement in 2018. It pays regular dividends of 10-20% of profits each year to increase shareholder value. Promoter shareholding has reduced in recent years as some promoters sold shares. The company has a negative working capital due to maturing long-term debt increasing current liabilities.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    58 views5 pages

    Ultratech Cement 1. Overview of Ultratech Cement: Chart Title

    Uploaded by

    ashuuu
    Ultratech Cement is the largest cement manufacturer in India with over 100 RMC plants. It maintains a debt-to-equity ratio of around 0.15 to take advantage of tax benefits of debt. It uses debt to fund acquisitions like buying JAL Cement in 2018. It pays regular dividends of 10-20% of profits each year to increase shareholder value. Promoter shareholding has reduced in recent years as some promoters sold shares. The company has a negative working capital due to maturing long-term debt increasing current liabilities.

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    © All Rights Reserved
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    of 5

    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.

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