UltraTech Cement shares slip as Q2 net profit plunges 36% to Rs 820 crore

UltraTech Cement's consolidated net profit for the quarter stood at Rs 820.04 crore, down 36.01 per cent from Rs 1,281.45 crore in the year-ago period

UltraTech Cement shares slipped over 2 per cent in Monday's afternoon trade on the BSE to register an intraday low of Rs 10,770.35 per share on the BSE. The stock declined after the company reported weak Q2FY25 results.

At around 2:17 PM, UltraTech Cement shares were down 2.16 per cent at Rs 10,822.35 per share on the BSE. In comparison, the BSE Sensex was up 0.12 per cent at 81,318.71, around the same time. The market capitalisation of the company around the time stood at Rs 3,12,382.4 crore. 

The cement company posted a consolidated net profit for the second quarter at Rs 820.04 crore, compared to Rs 1,281.45 crore in the year-ago period, a decline of 36.01 per cent year-on-year (Y-o-Y.

UltraTech Cement's consolidated revenue for the second quarter stood at Rs 15,634.7 crore, down 2.4 per cent Y-o-Y from Rs 16,012 crore in the year-ago period.

Its earnings before interest, tax, depreciation and amortisation (Ebitda) came in at Rs 2,018.27 crore, down 20.9 per cent from Rs 2,550.89 crore in the year ago period.

The company's subdued performance in the second quarter can be attributed to declining cement prices, coupled with lower demand. 

According to experts tracking the sector, with the first two quarters of 2024 seeing subdued economic activity due to a slower government capital expenditure cycle during the Lok Sabha elections, coupled with sporadic heatwaves and an above-normal monsoon during the second quarter, demand for cement is likely to have remained subdued during the quarter gone by.

Moreover, cement prices have been declining for some time now. According to a research note by HDFC Securities, "Cement prices corrected 1-3 per cent across all regions" during the quarter.

It added that demand for cement slipped in Q2 from the previous quarter, bringing more downward pressure on its prices. 

Axis Securities noted that the moderation in cement prices observed in Q4FY24 has introduced pricing headwinds, with prices correcting further in Q1FY25. 

"Although cement companies implemented price hikes in August 2024 in the range of Rs 15-Rs 20 per bag, weak demand forced manufacturers to roll back a large portion of these increases. Cement manufacturers attempted further price hikes in September 2024 by Rs 10-Rs 15 per bag across regions. This attempt succeeded to some extent, with exit prices for Q2FY25 estimated to be lower by 3 per cent," it stated.

"The slowdown in construction activities during Q1FY25 (general elections, heat waves) continued in Q2FY25 due to demand sluggishness (elections impact and heavy rains all around)," it noted in its research report released on October 14.

In the past one year, UltraTech Cement shares have gained 32.9 per cent, compared to the BSE Sensex's rise of 26 per cent during the period.