Ambuja Cements Q2 Results: Profit Surges Over Fourfold

Ambuja Cements Ltd.'s second-quarter net profit jumped 4.6 times, but still missed analysts' estimates.

The Adani Group-owned cement manufacturer's profit increased to Rs 643.5 crore in the quarter ended September, according to an exchange filing on Wednesday. That compares with the Rs 681.6-crore consensus estimate of analysts tracked by Bloomberg.

The rise in profits was driven by a 2% year-on-year decline in total costs to Rs 3,468 crore along with a 9.6 times rise in other income to Rs 378.1 crore.

Ambuja Cements Q2 FY24 Highlights (Standalone, YoY)

• Revenue up 8% at Rs 3,969.8 crore vs Rs 3,675.6 crore (Bloomberg estimate: Rs 4,261.3 crore).

• Ebitda up 2.47 times at Rs 773.5 crore vs Rs 313.1 crore (Bloomberg estimate: Rs 923.5 crore).

• Ebitda margin at 19.48% vs 8.52% (Bloomberg estimate: Rs 21.9%).

• Reported profit up 4.63 times at Rs 643.5 crore vs Rs 138.9 crore (Bloomberg estimate: Rs 681.6 crore).

Ambuja's consolidated profits, which includes earnings of the company's flagship subsidiary-ACC Ltd, surged 19-fold to Rs 987 crore. Consolidated cement sales volume grew 2.3% YoY to 13.1 million tonnes.

The 8% revenue growth was driven by volume growth of 7% at 7.6 million tonnes and an increase in the share of blended cement.

The company's flagship subsidiary, ACC Ltd., reported a volume growth of 17.4% at 8.1 MT, driven by green blended cement portfolio, accounting for 93% of total sales.

Ebitda per tonne rose 2.3 times to Rs 1,020 in Q2 FY24, from Rs 443 per tonne in the same period last year.

Total cost per tonne fell 8.5% to Rs 4,563 per tonne. This was driven by a 36% reduction in power and fuel cost to Rs 1,273 per tonne, along with 34% reduction in kiln costs. Cost of raw materials also declined 14%. Cost reductions drove the 1096-basis point expansion in margin.

Ambuja Cements announced the acquisition of Sanghi Industries Ltd., which has a capacity of 6.1 MT, during the quarter at an enterprise value of Rs 5,000 crore. This will increase the consolidated capacity from the current 67.5 million tonne to 73.6 MT, as the company targets a capacity of 140 MT by 2028. The company expects to complete the acquisition by Q3.

The company has 12.2 MT of brownfield and 7 MT of greenfield expansion projects in the pipeline, that are expected to be completed over the next two years.

"Along with strong demand for our premium cement products, our business performance improved due to operational excellence, supply chain management and sales and marketing excellence," said Ajay Kapur, chief executive officer of the company.

Shares of Ambuja Cements were trading 2.9% lower at Rs 411.95 apiece, after the results were announced, compared with a 0.33% decline in the benchmark NSE Nifty 50 at 2:23 p.m.

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