UltraTech Cement, a subsidiary of the Aditya Birla Group and India’s largest cement manufacturer, has reported its Q1 FY2024 earnings. The company announced a net profit of Rs 1,690 crore, a 6.8% increase YoY, comfortably beating market estimates. However, on a sequential basis, the net profit experienced a marginal rise of 1.19% from Rs 1,670 crore in Q4 FY2023.
UltraTech Cement Key points:
- UltraTech Cement reported a Q1 FY2024 net profit of Rs 1,690 crore, marking a 6.8% YoY increase, and a 17% YoY rise in revenue from operations to Rs 17,737.1 crore. However, sequential comparisons showed a slight net profit increase of 1.19% and a revenue decline of 4.95%.
- The company witnessed a drop in EBITDA margins by 320 basis points YoY, from 20.4% in Q1 FY2023 to 17.2% in Q1 FY2024. This was accompanied by a 6% increase in raw material costs and a 3% rise in energy costs YoY.
- Despite a 2.83% YoY decline in Grey Cement realisations, UltraTech’s total consolidated sales volume grew by 20% YoY, indicating a strong demand in the market.
- The company expects further growth in cement demand due to the predicted increase in infrastructure spending ahead of the 2024 general elections, though the shares closed at Rs 8,123 on the NSE on July 21, marking a 1.23% decrease.
Revenue from operations also witnessed robust growth, expanding 17% YoY to Rs 17,737.1 crore, compared to Rs 15,163 crore in Q1 FY2023. However, there was a quarter-on-quarter decline of 4.95% from Rs 18,662 crore reported in Q4 FY2023, which may warrant further scrutiny.
While revenue and net profit demonstrated an impressive trend, UltraTech reported a decrease in its EBITDA margins, dropping by 320 basis points from 20.4% in Q1 FY2023 to 17.2% in the quarter under review. This suggests increasing operational expenses, as further confirmed by the company’s disclosure of a 6% increase in raw material costs and a 3% rise in energy costs YoY.
Realisations from Grey Cement, a key revenue source for UltraTech, saw a modest decline of 2.83% YoY to 5,350 million tonnes compared to 5,506 million tonnes in Q1 FY2023. Nevertheless, the company managed to boost its total consolidated sales volume by a remarkable 20% YoY, indicating strong demand in the market.
According to UltraTech, cement demand across all sectors remains solid, providing a favourable environment for the company’s performance. The firm expects further tailwinds from the anticipated rise in infrastructure spending ahead of the 2024 general elections, which is likely to stimulate cement demand further during this fiscal year.
Despite the mixed performance, UltraTech Cement’s shares closed at Rs 8,123 apiece on July 21 on the NSE, marking a 1.23% decrease.
With an impressive installed manufacturing capacity of 114 million tonnes per annum, UltraTech continues to dominate the Indian cement industry, offering a diverse product range including ordinary portland cement, portland pozzolana cement, and ready-mix concrete. The company’s comprehensive network of plants and distribution centres caters to both domestic and international markets within the construction industry.
The Q1 FY2024 results paint a generally positive picture of UltraTech’s financial health, yet the decline in EBITDA margins and sequential fall in revenue highlights the need for continued focus on operational efficiency.
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