Ambuja Cements beats street; Q2 net up 26%

Relatively less exposure to the southern market helped the company put a good quarterly show

Ambuja Cements, sister-concern of ACC, has not fallen in line with its peers in the quarter ended June. Amid companies like UltraTech and ACC registering dips in their profitability and settling at levels much lower than experts' estimates, Ambuja not only posted higher profits but also beaten the street expectations with a wider margin.

Having strong presence in the western and northern markets helped the company do better in its quarterly performance as both the regions saw better price realisation of Rs 10-15 for a 50 kg bag during the quarter. UltraTech and ACC have significant exposure to the southern market - where prices still continues to trade low compared to rest of the country.

The company, with a 27 million tonne of cement manufacturing capacity, recorded an increase of 26.2% in net profit at Rs 408.7 crore compared with Rs 324.2 crore in the previous corresponding quarter. It did much better than brokerages' estimates of Rs 389 crore. The company, one of the strongest cement brands in India, commands premium on its products

Ambuja's shares on the BSE closed strong at Rs 218.30, up a percentage point on Thursday.

Higher sales volume helped the company clock better net sales, which again was ahead of what the industry experts anticipated. Ambuja posted a net sales of Rs 2,706.35 crore against Rs 2,343.77 crore in the same quarter last year - a rise of 15.4%. Brokerages' consensus stood at Rs 2,631 crore as net sales.

In a statement, Ambuja said, "Although macro-economic condition remains challenging, construction activity is expected to pick up pace considering favourable announcement in the Union Budget for infrastructure & housing. The company continues to work on improving efficiencies and focus on customer and commercial excellence. The company believes that these initiatives will help to preserve and also improve performance."

Ambuja sold nearly 8% more cement during the April-June quarter reaching 5.79 million tonnes against 5.38 million tonnes in the corresponding quarter of the previous year.

The company has announced an interim dividend of Rs 1.8 a share.