UltraTech Cement Q3 results: Firm posts highest ever quarterly net profit with 68% y-o-y rise

UltraTech Cement, the flagship company of the Aditya Birla Group, reported its highest ever quarterly profit after tax of ₹1,777 crore during the third quarter of the current fiscal, an increase of 68% over the same period last year.

UltraTech also reported a 7.8% year-on-year (y-o-y) increase in its consolidated net sales to ₹16,487 crore in the October-December quarter from ₹15,299 crore in the same quarter last year, it said in an exchange filing.

The stock closed 2.07% higher at ₹10,097 on the BSE on Tuesday.

Consolidated earnings before interest, tax, depreciation, and amortization (Ebitda) for the company stood at ₹3,395 crore during the quarter, a 38% increase over last year with an operating profit margin of 19%.

The company attributed a positive growth in its financials to the cement demand, improved efficiencies, along with low fuel and raw material costs.

The company said it witnessed an overall 5% y-o-y rise in the sales volume for grey cement, cement exports & clinker sales and white cement, during the quarter. While the overseas sales volume for grey cement saw a 20% y-o-y growth.

The Kumar Mangalam Birla-led company recorded total expenses of ₹13,485 crore during the quarter, with raw material costs marginally increasing on account of an increase in the cost of gypsum and slag.

The company is also said to be moving towards use of 85% green energy power by the end of 2030. Currently, 24% of the cement manufacturers power requirements are met through green power sources.

Analysts expected the demand for cement in the third quarter to have tapered after six consecutive quarters of robust growth and with this slack in demand, the prices of cement seem to have recovered.

“Cement demand eased to approximately 7% year-on-year in Q3FY24, a decline from the average 12% growth witnessed in the previous six quarters, primarily influenced by factors like state elections, floods in the south, sand shortages, and festive periods impacting November and December. Contrary to the anticipated 10-15% quarter-on-quarter growth post-monsoon, cement sales only modestly increased. Despite disappointing demand, cement prices showed resilience with pan India prices rebounding quarter-on-quarter, mitigating the impact of volume loss,” said Rajesh Ravi, Institutional Research Analyst, HDFC Securities in a report. “We anticipate a 10% y-o-y industry volume growth in FY24, as we foresee a bottoming out of input costs in Q3FY24. With recent price recovery and a decline in fuel costs, we estimate a margin recovery for our coverage universe.”

HDFC securities maintains a buy rating on UltraTech.

On the back of moderate rise in demand, the company’s capacity utilization stood at 77% during the quarter on expanded capacity.

The company has spent ₹6,922 crore in the first nine months (April - December) of the current fiscal year. During the third quarter, it acquired 0.54 MTPA cement grinding asset of Burnpur Cement Ltd in Jharkhand for ₹169.79 crore. It also said that its second and third phase of capacity expansions are in full swing.

The Aditya Birla company during the quarter in consideration also filed applications with the stock exchanges for the proposed acquisition of 10.75 MTPA cement assets of Kesoram Industries Ltd. It is currently awaiting regulatory approvals on the deal.

“Upon completion of these expansions/acquisition, the company’s capacity will grow to 195.4 mtpa including its operations in the UAE, reinforcing its position as the third largest cement company in the world, outside of China and the largest in India by far,” it added.

India is the second-largest cement producer in the world and accounts for over 8% of the global installed capacity. In 2022, the market size of India’s cement industry reached 3.64 billion tonnes and is expected to touch 4.83 billion tonnes by 2028, exhibiting a CAGR of 4.94% during 2023-28. Currently, the installed cement capacity in India is 553 MTPA with a production of 298 MTPA.