UltraTech Cement may see robust Q2 earnings on demand surge, price hikes

Analysts predict a YoY revenue increase of up to 15% to Rs 15,769.40 crore, with a 60% YoY surge in net profit to Rs 1,334 crore based on 10 brokerage estimates from Moneycontrol.

UltraTech Cement Ltd is poised for robust Q2 earnings growth on the back of surging demand, government initiatives for infrastructure and housing, and pre-election spending.

The company has also resumed price hikes in the September quarter which, along with increased realisations, lower power and fuel costs, and reduced freight expenses, is expected to boost earnings. The company will report earnings on October 19.

Analysts predict an on-year revenue increase of up to 15 percent to Rs 15,769.40 crore, with a 60 percent annual surge in net profit to Rs 1,334 crore for UltraTech Cement, based on 10 brokerage estimates from Moneycontrol. However, both net profit and revenue are likely to dip sequentially by 30 percent and 10 percent, while EBITDA may rise 41 percent YoY to Rs 2,633.50 crore.

Recent declines in domestic and international petroleum coke prices are expected to improve profitability, although imported coal prices have risen 15 percent, and pet coke prices are up 28 percent since July 2023. Additionally, higher raw material costs in 1QFY24, such as fly ash and slag, have increased expenses for many companies, analysts added.

During the July-September quarter, UltraTech Cement achieved strong sales volumes of 26.69 million tonnes, with a 15 percent YoY increase in domestic market sales volumes to 25.66 million tonnes. The company expanded its operations in Odisha and Chhattisgarh in FY23 and analysts expects a strong recovery.

Recent price hikes in the cement industry, with further increases expected in October, are likely to bolster earnings. UltraTech Cement maintains top-notch operational efficiency, with an EBITDA per ton expected to remain above Rs 1,000.

In the April-June quarter, UltraTech Cement reported a 17 percent YoY increase in revenue to Rs 17,737.1 crore, and a 6.8 percent YoY rise in net profit to Rs 1,690 crore, although operating profit margins contracted by 300 basis points YoY to 17 percent. UltraTech Cement, a subsidiary of Grasim Industries, is part of the Aditya Birla Group and produces various cement types.