India's largest cement maker UltraTech Cement reported a 49 percent on year increase in consolidated net profit at Rs 2,226 crore for the June quarter, a regulatory filing by the Aditya Birla group flagship firm said, however, it missed estimates by a Moneycontrol poll of eight brokerages, while revenue from operations grew 17.7 percent YoY to Rs 21,275.45 crore during the first quarter of the fiscal.
UltraTech's Q1 financial results were aided by a 9.7 percent growth in sales volumes for the quarter to 36.83 million tonne (MT), largely due to the amalgamation of both of its major recent acquisitions within the company- The India Cements, and the cement business of Kesoram Industries.
Channel checks had indicated strong price growth in some southern and eastern markets after a long period of sluggish pricing activity. Brokerages said the improvement in prices came about due to increasing infrastructure and real estate demand, as well as ongoing capacity consolidation in previously-fragmented markets.
The increase in volumes and pricing has also been reflected in metrics such as earnings before interest, taxes, depreciation, and amortisation (EBITDA). For the reported quarter, consolidated EBITDA increased by 44 percent to Rs 4,591 crore, while the operating EBITDA per tonne was reported at Rs 1,248, Rs 337 higher than the same quarter last year, according to an investor presentation.
UltraTech's operating margin for the April-June quarter was 21 percent, compared to 16 percent in the year-ago period.
The company, which has embarked on an aggressive cost reduction and efficiency plan, reported reduction in its lead distance - travelled by inventory from plant to the markets - as well as in power and fuel costs on a per-unit basis. Ultratech reported an increase in its input costs with cement makers flagging recent increases in the price of fly ash and other inputs.
India Cements 'turnaround'
UltraTech's management said it has managed to turn around the financials of the Chennai-based India Cements, which had a significant market share in southern markets but was saddled with debt and high competition from larger players, including UltraTech. While the acquisition was announced around a year ago, it was fully closed earlier this year.
For the ongoing quarter, India Cements posted a positive EBITDA of Rs 92 crore, UltraTech said, compared to a loss of Rs 9 crore in the year-ago period. India Cements has a capacity of 14.45 million tonne per year (MTPA), largely located in southern India. In India Cements' northern India facility, UltraTech said that it has released an additional capacity of 300,000 tonne per annum through debottlenecking measures.
UltraTech said it is putting in place a capital expenditure plan to bring the India Cements facilities up to standard with the rest of the company's cement manufacturing plants.
On July 21, the company's shares on the National Stock Exchange closed around 0.5 percent higher at Rs 12,561 apiece, having moderated some earlier gains.
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