UltraTech Cement posted a 35 percent surge in net profit in the fourth quarter of FY24, beating estimates, on the back of robust demand for the building materials and lower operating costs.
Profit for the Aditya Birla Group company climbed to Rs 2,258.58 crore in the January-March period from Rs 1670.10 crore a year earlier, the company said on April 29.
A Moneycontrol poll of 12 brokerages pegged net profit at Rs 1,976.58 crore, a 23 percent increase YoY and a 15 percent rise quarter-on-quarter (QoQ).
The cement maker's board recommended a dividend of Rs 70 a share of face value off 10-each for FY24.
Revenue jumped 9.4 percent to Rs 20,418.94 crore. Sequentially, revenue rose 21 percent and profit surged 27.3 percent.
The cement sector saw a slow start to the quarter due to harsh winters in the north and festivities in the south. The east struggled with fiscal challenges but showed signs of recovery towards the quarter's end. Cement prices were under pressure in Q4FY24 due to rolled-back price hikes amid subdued demand. Price hikes initiated in the Septermber-October were mostly reversed in recent months.
This comes amid a robust demand environment, sparked by healthy government spending on infrastructure and increased affordable housing projects.
Consolidated EBITDA rose to Rs 4,250 crore in from Rs 3,444 last year.
Cement volume growth recovered to a healthy 7-8 percent on-year on aggressive volume push, after growing around 15 percent on-year in the first half and logging a moderate slowdown in the third quarter due to regional hindrances, markets analytics firm Crisil said in its sector report on April 23.
Weak prices to pressure earningsThe war for market share in the cement industry is heating up and analysts expect big players to continue taking over smaller companies and consolidate to protect and gain market share.
UltraTech acquired the cement business of the BK Birla Group's Kesoram Industries in an all-stock deal. The acquisition will give UltraTech access to two integrated cement manufacturing units in Karnataka and Telangana with a combined capacity of 10.75 million tonnes per annum
However, analysts said the heightened ambitions of the major players may lead to price wars even as new capacities are added, hurting margins.
Against the trend of firm pricing in the early months of the fourth quarter (and a price drop in March due to the yearend volume push), January and February did not see sustained price hikes this year, highlighting the elevated competitive intensity in the market, Crisil said in its report.
At 3.23 pm, the stock was trading at Rs 9,951.35, up 2.58 percent up from previous close.
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