 "Weak price realisations make a crack in UltraTech Q3FY25 profit")
India’s largest cement maker, UltraTech Cement, reported a 17.3 per cent decline in its net profit (attributable to the owners of the company) in the October-December quarter (Q3). The decline was due to weak price realisations, despite a rise in volumes.
For the quarter under review, the Aditya Birla group company reported a consolidated net profit of Rs 1,470 crore, with a marginal 2.7 per cent rise in revenue to Rs 17,193 crore from a year ago.
The company's Q3 performance also saw a 73.89 per cent jump in other income to Rs 244 crore. Profit before depreciation, interest, and tax was down 7.96 per cent to Rs 3,130 crore on a year-on-year (Y-o-Y) basis.
UltraTech beat Bloomberg analysts’ poll estimates of a net income of Rs 1,323 crore and revenue of Rs 17,129 crore. Sequentially, UltraTech's net profit rose 79.2 per cent, and revenue rose 9.97 per cent.
UltraTech’s 10 per cent growth in volumes contrasts with Dalmia Cement (Bharat)’s reported 2 per cent decline for the same period. Sales realisation per tonne, the company said, was down 9.6 per cent Y-o-Y to Rs 4,970, indicating weak pricing.
In an investor call on Thursday, UltraTech management termed it “the lull before the storm”, adding that “the storm is positive”.
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“Most part of 2024 was a lull for the cement industry for multiple reasons. The lull ended somewhere in December on a positive note,” said Atul Daga, chief financial officer of the company, on a call.
According to UltraTech’s Thursday presentation, demand from the infrastructure segment was flat or negative across markets in the quarter. Pollution control measures, shortage of aggregates, extended monsoons, state elections, and issues related to fund allocation for construction projects were factors contributing to the weak infrastructure-led demand.
Regarding the open offer made to public shareholders of India Cements, the company said the number of shares tendered under the open offer is more than the size of the offer.
“Consequently, UltraTech will accept shares tendered on a proportionate basis in consultation with the manager to the offer. Payment of consideration for shares accepted will be completed on or before February 4, 2025,” the media release said.
With the acquisition of India Cements, UltraTech’s cement capacity has increased to 171.11 million tonne per annum (mtpa) on a consolidated basis. The company reported a capacity utilisation of 73 per cent during the quarter.
UltraTech added that its capacity expansion plans are on schedule, and upon completion of the ongoing expansion projects and the acquisition of Kesoram Cement (10.75 mtpa), UltraTech will operate more than 200 mtpa cement capacity in India by the end of 2026-27.
In its outlook, the company maintained that the government’s focus on infrastructure and housing projects, together with increased rural and urban demand, is expected to generate sustainable volume growth of 7-8 per cent.