BackRising infra demand drives UltraTech net profit up to ₹1,688 Cr
During the April- June period, the company’s revenue from operations increased by 17% to ₹17,737 crore from ₹15,163.98 crore in Q1 FY23
PremiumMumbai: Despite rising raw material prices and energy costs, Aditya Birla Group-owned UltraTech Cement Ltd., on Friday, reported a 6.6% year-on-year (YoY) jump in consolidated net profit to ₹1,688.45 crore in the June-ended quarter of FY24.
Profit surpassed Bloomberg analysts' estimate at ₹1, 615.3 crore done for the country's largest cement-maker.
During the April- June period, the company’s revenue from operations increased by 17% to ₹17,737 crore from ₹15,163.98 crore in Q1 FY23.
While announcing the results, the company said it has achieved a capacity utilization level of 89% as against 83% during the first quarter of last fiscal. Ultratech's domestic sales volume registered a 20% growth year-on-year.
Cement businesses in India have been struggling for better margins due to several factors including rising energy costs, rising raw material prices, and a fierce competition after the entry of Adani Group into the industry through acquisition of Ambuja Cements Ltd. and ACC Ltd. in a closely-fought battle last year.
Ultratech Cement said the energy cost was higher by 3% YoY, primarily due to currency devaluation during the June quarter. Besides, a 6% rise in raw material cost, mainly driven by the higher prices of fly-ash and slag, had a compounding effect on the operating margins.
The company's operating margin came down to ₹1,034 during June quarter from ₹1,248 in the same period of last year and ₹1,060 in the previous quarter.
However, the demand for cement across all sectors continues to remain strong, said the company.
"Higher infrastructure spending ahead of the general elections in 2024 is expected to further propel cement demand during this fiscal," the company said.
Ultratech has commissioned cement capacity of 3 MTPA during the quarter, taking its total grey cement capacity to 129.95 MTPA in India.
The company’s expansion programme is on track. Following the successful commissioning of 12.4 mtpa capacity of grey cement in FY23, the company has commissioned 4.3 mtpa capacity so far in this financial year. These include 2.2 mtpa brownfield cement capacity at Patliputra in April, 2023, 0.8 mtpa brownfield cement capacity at Neem ka Thana, Rajasthan in May, 2023 and 1.3 mtpa brownfield cement capacity at Sonar Bangla, West Bengal in July 2023.
Work on its next phase of growth of 22.6 mtpa is in full swing. Commercial production from these new capacities is expected to go on stream in a phased manner by FY25/FY26.
Revenues from grey cement (domestic) stood at ₹15,247 crore, a 17% growth YoY, white cement revenues rose 18% YoY to ₹590 crore, and earnings from ready-mix concrete grew 37% YoY to ₹1,233 crore in the June quarter of FY24.
Ultratech'stock, with a market capitalization of ₹2.35 trillion, over the past year, has yielded a 32% return, outperforming the broader market index Nifty 50's 19% returns.
Shares of Ultratech Cement closed 1.28% lower at ₹8,119.20 apiece on the National Stock Exchange on Friday as Indian markets logged off the week with a 1.31% loss.
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