UltraTech Cement Q2 Results: Profit Surges 69%, Meets Estimates
The company's Q2 net profit grew 68.75% YoY to Rs 1,280.38 crore, meeting the consensus estimate of Rs 1,334 crore.
UltraTech Cement Ltd.'s second quarter profit jumped, meeting analysts' estimates.
The cement bellwether's net profit grew 68.75% year-on-year to Rs 1,280.38 crore in the quarter ended September, according to an exchange filing on Thursday. That compares with the Rs 1,334 crore consensus estimate of analysts tracked by Bloomberg.
UltraTech Cement Q2 FY24 (Consolidated, YoY)
Revenue up 15.3% to Rs 16,012.1 crore (Bloomberg estimate: Rs 15,769.3 crore).
Ebitda rises 36.7% to Rs 2,550.9 crore (Bloomberg estimate: Rs 2,651.5 crore).
Margin at 15.93% vs 13.43% (Bloomberg estimate: 16.8%).
Net profit up 68.8% at Rs 1,280.4 crore (Bloomberg estimate: Rs 1,334.2 crore).
Consolidated sales volume rose 15.5% YoY to 26.7 million tonne, with capacity utilisation at 75%.
UltraTech's domestic grey cement revenue increased 15% YoY to Rs 13,412 crore, on the back of better-than-expected volume growth of 15.4% YoY to 25.6 million tonne.
Overseas segment revenue rose 30% to Rs 600 crore, with volume expanding 21.6% to 1.18 MMT. UltraTech's Birla White business witnessed 9% YoY growth in revenue at Rs 587 crore, with volume increasing 10.5% YoY.
Margin rose by 250 basis points to 15.9% on account of lower energy costs. Realisation for grey cement remained flat YoY at Rs 5,349 per tonne.
Lower petcoke and imported coal prices prior to July are leading to lower fuel costs in Q2 due to an inventory lag. Energy cost was lower by 10% YoY at Rs 1,555 per tonne, aiding margin and accounted for 35% of total costs.
Raw material costs, accounting for 14% of total costs, increased by 4% YoY on account of rise in cost of flyash and slag.
Although petcoke prices have risen over the past two months, the impact of higher costs is expected to kick in only by the third or fourth quarter of the current fiscal due to an inventory lag, according to analysts.
UltraTech's total capacity of grey cement in India increased to 132.45 million tonne in Q2 after the company commissioned a 1.3 MT and a 1.2 MT brownfield capacity at its West Bengal and Gujarat units, respectively.
It expects this capacity to increase to 155.05 MT by financial year 2025 after the completion of its Phase 2 expansion.
Management Commentary
"Demand revival is imminent, especially during the festive season and the January-March peak construction period," said the company in its exchange filing. "Demand will also be led by pre-election spending, a continued government push on infrastructure development, and sustained real estate development."
Cement prices have risen by 3-4% pan India and the company expects the higher price scenario to hold given rising input costs. The management also hinted that the cost curve is moving southwards for the company. Based on company expectations, if fuel costs fall further along with price hikes, this may imply a margin expansion in the next quarter.
The company plans to tentatively complete its Phase 2 capacity expansion by June 2025, increasing its overall capacity to 159.65 million tonne. The company spent Rs 2,545 crore towards capex in Q2. It has a target capex spend of Rs 6,000-Rs 7,000 crore for FY24.
Beyond Phase 2 expansion, the management indicated that they will increase capacity further in batches of approximately 20 million tonne and reach 200 million tonne of capacity by end of this decade.
Shares of UltraTech Cement closed 2.9% higher at Rs 8,518.55 apiece after the results were announced, as compared with a 0.24% decline in the NSE Nifty 50.
