Adani group's Ambuja Cements reported a 42 percent on-year decline in its Q2 FY25 consolidated net profit to Rs 456 crore, primarily due to continued weak cement prices and sluggish demand. However, consolidated revenue from operations rose marginally by over 1 percent to Rs 7,516 crore.
The cement major's profit fell short of Street expectations. A Bloomberg poll of brokerages had pegged Ambuja Cements' Q2 net profit at Rs 510 crore, and revenue at Rs 7,171 crore.
Ambuja Cements share price jumped after the results announcement, and was trading at Rs 577.85 on National Stock Exchange, up more than 4.5 percent from the previous close.
Operating costs were reduced by 4 percent year-on-year to Rs 4,497 per metric tonne, benefiting from a 13 percent reduction in kiln fuel costs, partly due to increased usage of low-cost imported petcoke and e-auction coal.
Ambuja’s sales volume (clinker and cement) saw a year-on-year increase of 9 percent to 14.2 million tonnes on a consolidated basis, reaching its highest Q2 volume in five years.
Realisations likely remained under pressure during the July-September quarter amid weak cement prices, while demand growth was dampened by heavy rains and a shortage of labour and other inputs. As with other cement players, analysts had anticipated subdued growth in Ambuja Cements’ revenue alongside a sharper decline in its bottom line.
As a result, the company's operating EBITDA on a consolidated basis declined to Rs 1,111 crore for the quarter, lower than Rs 1,302 crore reported in the same period the year prior. It also caused the consolidated EBITDA margin to decline to 14.8 percent from 17.5 percent in the year-ago period. The operating EBITDA on a per tonne basis, a crucial competitive metric in the industry, also declined as a result of weak prices, to Rs 780, against Rs 995 last year.
Ambuja Cements’ Q2 FY25 results are affected by recent acquisitions, leading to limited comparability with previous periods. ACC, Ambuja's subsidiary, acquired the remaining 55 percent stake in Asian Concretes and Cements Private Ltd (ACCPL) and its subsidiary, Asian Fine Cements Pvt Ltd (AFCPL), in January 2024. Following this, ACC remeasured its prior 45 percent stake and recognized a gain under exceptional items in March 2024.
Additionally, Ambuja’s acquisition of a majority stake in Sanghi Industries in December 2023 included subsequent sales of shares to meet public shareholding requirements, impacting the financial results. The consolidation of ACCPL and Sanghi’s results from their acquisition dates makes Q2 FY25 results not directly comparable to the prior year’s Q2 figures.
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