UltraTech misses Q2 profit estimate, sales growth marginally ahead
UltraTech, the largest cement producer in India, came up with its second-quarter numbers that almost met street expectations with revenue marginally ahead even though net profit was below what analysts were projecting.
Consolidated net profit for the July-September quarter was almost flat at Rs 1,313 crore compared with Rs 1,309 crore in the year-ago period.
Sequentially, net profit declined 22.8%, which was already factored in by analysts, given the impact of higher fuel and logistics costs during the quarter. Standalone net profit rose 7.6% to Rs 1,300 crore.
Analysts were expecting a profit after tax of around Rs 1,350 crore.
The company’s costs spiked as coal and pet coke prices nearly doubled in the quarter, resulting in energy costs shooting up 17% year-on-year. The firm said it expects to commence mining operations at its Bicharpur coal block located in Madhya Pradesh in the October-December quarter that would reduce dependence on coal purchases.
UltraTech’s profit before depreciation, interest and tax was almost flat, rising 0.8% to Rs 2,855 crore on a consolidated basis and 1.6% on a standalone basis to Rs 2,742 crore.
Consolidated sales rose 15.7% to Rs 12,016 crore on a year-on-year basis while it climbed 15.2% on a standalone basis. On a sequential basis, consolidated revenue from operations was up 1.6%. It inched up 0.6% to Rs 11,548 crore at a standalone level.
UltraTech’s stock, which has risen 67% over the last 12 months, pared its early gains during intra-day trade and closed flat at Rs 7,397.70 a share on Monday after declaring its results.
UltraTech said recovery in rural housing, higher minimum support price for kharif crop, improved foodgrain production in rabi harvest, a third consecutive normal monsoon and a pick-up in infrastructure-led construction activity are likely to drive cement demand off-take.
However, continuous increases in input costs like coal, pet coke, and diesel pose a challenge for the industry.
“UltraTech is confident of weathering the storm of increase in prices of coal, diesel and other inputs, with its sustainable efficiency improvement programs, accompanied by increase in selling prices to absorb the increase in costs,” the firm said.
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