UltraTech Cement Q1 profit rises 29% to Rs780 crore
Net sales rise 4% to Rs6,538 crore; higher operational efficiencies help UltraTech Cement beat market estimates
Mumbai: UltraTech Cement Ltd, India’s largest cement maker, on Tuesday said net profit in the quarter ended 30 June rose 29% from a year ago on higher operational efficiencies.
The company reported a consolidated net profit of Rs.780 crore in the April-June period against Rs.604 crore a year ago. Net sales rose 4% to Rs.6,538 crore from Rs.6,281 crore.
The earnings beat market estimates. In a Bloomberg poll, two brokers had estimated consolidated net sales at Rs.6,816.1 crore and net profit at Rs.693.30 crore.
Earnings before interest, depreciation, taxation and amortization in the June quarter was up 25% to Rs.1,626 crore, from Rs.1,302 crore reported in the same period a year back.
“The quarter witnessed improvement in operating costs on the back of operational efficiencies and a judicious power and fuel mix,” the company said in a statement to the BSE.
The cement maker said in its outlook for the current fiscal year that demand is expected to grow at around 7%, given the government’s focus on infrastructure, housing, smart cities and roads. On 4 July, UltraTech amended an agreement with Jaiprakash Associates Ltd, agreeing to buy its 21.1 million tonnes cement assets for Rs.16,189 crore, Rs.289 crore more than the enterprise value agreed upon earlier. In its presentation for the June 2016 ended quarter results, UltraTech said financing for the deal has been tied up and the application with Competition Commission of India (CCI) for approval has been filed.
“Transaction expected to complete in next 9-10 months after getting all the regulatory and shareholders’ approval,” the presentation said.
However, Kumar Mangalam Birla, chairman for the company at its annual general meeting on Tuesday set a timeline of 12 months. In its presentation, the company said domestic cement sales were 12.57 million tonnes, up 6% from a year ago. Average realization for the June quarter fell by 2% to Rs.4,683 per tonne.
“Though volumes grew by 6% YoY, realisations remained under pressure, which was on expected lines. Higher operating leverage and lower fixed cost resulted in 340 basis points expansions in margins. Other income was up 50% which resulted in better than expected profit after tax. The volume growth after picking up in March quarter, has gained seems to be cooling off while realisations are still not in an uptrend,” said Siddharth Purohit, senior equity research analyst, Angel Broking Pvt. Ltd.