Mumbai: UltraTech Cement Ltd, India’s largest cement maker, on Monday said its net profit in the quarter ended 30 September rose 25.27% from a year ago because of higher other income.
The company reported a consolidated net profit of Rs614.30 crore in the July-September quarter, compared with Rs490.39 crore a year ago.
Net sales dropped 2.53% to Rs5,709 crore from Rs5,857 crore as volumes grew just 1%. Volume dispatched was 11.18 million tonnes (mt) in the second quarter against 11.09 mt a year ago. The July-September quarter is typically a poor quarter for cement makers because offtake gets hit owing to rains.
The earnings failed market estimates. In a Bloomberg poll, two brokers had estimated consolidated net sales at Rs6,322.40 crore and net profit at Rs701.40 crore.
UltraTech shares fell 0.74% to Rs4,008.70 per share on BSE, while the benchmark Sensex index lost 0.52% to 27,529.97 points.
“Volumes and realizations are disappointing. That is not all. Power and fuel cost is on an upward trend. Prolonged monsoon and a slower-than-expected pick-up in construction activity continues to remain a concern,” said Rohit Natarajan, analyst with IDBI Capital.
Earnings before interest, taxes, depreciation and amortization in the September quarter was up 16% to Rs1,378 crore from Rs1,186 crore a year ago. That translated into an operating profit of Rs1,187 per tonne, up 18% from a year ago.
The company is sanguine about its prospects for the rest of the year, citing the government’s thrust on developing infrastructure spending, good monsoons, development of smart cities leading to growth in housing demand and the slower pace of capacity addition in the cement industry.
“Cement prices in most parts of India have been positive and have been inching up, though marginally. We expect a pick-up in construction activities from October onwards and see rural demand as a driver of growth,” the UltraTech management told analysts in a post-results conference call.
On 4 July, UltraTech agreed to buy 21.1 mt cement assets of Jaiprakash Associates Ltd for Rs16,189 crore. In its presentation for the September quarter results, UltraTech said it has received approval from the Competition Commission of India (CCI) and that a court-convened meeting for seeking approval from shareholders and creditors is scheduled on 20 October. It said it expects to complete the transaction within six months.
Harsha Jethmalani contributed to this story.