UltraTech’s Q4 net profit rises 36% y-o-y on lower fuel costs; beats estimates

UltraTech Cement, Aditya Birla Group's cement flagship, on Monday said its January-March consolidated profit after tax (PAT) rose 36% year-on-year (y-o-y) to ₹2,258 crore, beating estimates, bolstered by a decline in fuel costs and double-digit volume growth.

The country's largest cement manufacturer had reported a net profit of ₹1,666 crore in the same quarter of FY23.

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Consolidated revenue from operations increased 9.4% YoY to ₹20,419 crore in the three months through March 2024. Bloomberg had estimated the company to report ₹2,123 crore in PAT and a revenue of ₹20,084 crore for the quarter. “Going forward, the demand for cement across all sectors continues to remain robust, which augurs well for the Company,” UltraTech said in a statement.

Earnings before interest, tax, depreciation, and amortization (Ebitda) came in at ₹4,250 crore, with a margin of 20.81%. “The company’s imported fuel consumption cost during Q4FY24 was 13% lower than Q4FY23, and it remained flat QoQ. Effective capacity utilization was 98% during the quarter and 85% for the full year,” the company added.

For the full fiscal year ended 31 March, it reported a consolidated net profit of ₹7,005 crore, an increase of 38%. Revenue rose 12% to ₹70,908 crore, with an Ebitda of ₹13,586 crore. Ebitda margin stood at 19.16% as prices of coal and petcoke, fuels used in cement production, eased during FY24. The company achieved a full-year Ebitda per million tonne (MT) of ₹1,011.

According to a sector report by rating agency Crisil, cement volume growth recovered to a healthy 7-8% year-on-year in the last quarter of fiscal 2024, on an aggressive volume push, after growing 15% on-year in the first half and logging a moderate slowdown in the third quarter due to regional hindrances.

“This ensured the third straight year of healthy demand growth at 11% in fiscal 2024 to 441 MT. On this high base, Crisil MI&A Research expects demand growth to cool to 6-7% in fiscal 2025," Crisil added in its report released last week.

During the quarter, companies aggressively pushed volume at the expense of pricing, leading to a 6% sequential decline in cement prices to ₹370-375 on average per 50-kg bag. “Cement prices have been subdued, declining 1.5% to ₹383-385 per bag on average in fiscal 2024 from an all-time high of ₹391 per bag in fiscal 2023," Crisil noted.

“We expect industry volume to grow by 10% y-o-y in FY24. Input cost reduction should almost bottom out in Q4FY24, in our view. Owing to fuel cost cool-off and higher green power share, we estimate our coverage universe margin will recover in FY24,” said Rajesh Ravi, research analyst at HDFC securities, had said in a report. HDFC securities maintains a buy rating for UltraTech Cement.

UltraTech has surpassed 150 million tonnes in annual manufacturing capacity, and aims to reach 200 million tonnes. Last week, it announced brownfield expansions of two of its facilities in Maharashtra at an investment of ₹504.4 crore.

“The company continues to deliver strong cash flows. During FY24, the company’s net debt increased only by ₹77 crore after spending over ₹9,400 crores on capital expenditure,” UltraTech added.

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