India’s biggest cement company by capacity UltraTech on Tuesday reported a strong 29.17% year-on-year rise in its net profit to Rs 780.11 crore for the three months to June.
The bottomline was boosted by a 13.3% rise in other income but the company also paid out higher taxes. Net sales for Q1FY17 stood at R6,538 crore, up just 4%, y-o-y with realisations falling 2% y-o-y. Bloomberg consensus estimates had pegged net sales at R6,816 crore.
With the company reining in costs, the earnings before interest, taxes, depreciation and amortization (EBITDA) margins for the June quarter came in at 22.8%, 380 basis points over Q1FY16.
The company clocked an EBITDA/tonne of Rs 1,043/tonne, an increase of Rs 162, y-o-y.
The UltraTech stock gained 0.2% on the Bombay Stock Exchange to close at Rs 3,505.90. The Aditya Birla Group flagship company said in a release that it was toning down volume growth guidance to 7% for the current fiscal from the earlier guidance of 7-8%. An analyst said the key driver for demand is expected to be government spending on infrastructure as well as an expected pick-up in rural housing.
In the June quarter, the company reported sales volumes of 12.57 million tonnes, registering a growth of 6%, y-o-y.
The company said it was helped by operational efficiencies, an improvement in operating costs and a judicious mix of power and fuel. Analysts pointed out revenues were also boosted by prices that held firm and strong demand growth in northern India prior to elections in the states of Uttar Pradesh and Punjab.
The states of Andhra Pradesh and Telengana also put in a good performance, they said adding operating costs are likely to inch up as the impact of the increase in fuel prices will be felt from the second quarter onwards.
During the quarter under review, the company commissioned three grinding units – one each in Haryana, West Bengal and Bihar. A bulk cement terminal also came on stream during the quarter in Pune. In an update to a deal with Jaypee Group’s cement plants announced earlier this year in March, the company said the financing for acquiring the plants have been tied up and that it has applied to the Competition Commission of India (CCI) for approval.
Addressing shareholders at the company’s annual general meeting, Aditya Birla Group chairman Kumar Mangalam Birla said the move is strategic, aimed to brighten the future prospects of the company.
The total capacity of the plants proposed to be acquired stand at 21.2 million tonnes annually and together with UltraTech’s current capacity of 66.3 million tonnes, will take its total capacities to 91.1 million tonnes. UltraTech is already the fifth largest cement company in the world and this acquisition will help it make further inroads into the growing markets within India.