Ultratech Cement comes in with a record June quarter, profit up 17%

Ultratech Cement’s industry-leading double-digit volume growth will help it gain market share, its chief financial officer, Atul Daga, said on Monday as the company reported its highest ever June-quarter volume, revenue and net profit.

The country’s largest cement producer saw its consolidated bottom line grow over 17% year-on-year to Rs 2,604 crore as revenue rose over 16% to Rs 24,648 crore.

“81% capacity utilization on an expanded base of 200 million tonnes in the seasonal transition quarter reflects the depth of our demand pipeline,” Daga said on the post-earnings call.

Aditya Birla Group company sees YoY volume growth of 13.1% in June quarter; This compares to expected volume growth of 7-8% for the industry.

Earnings before interest, tax, depreciation and amortization (EBITDA) rose 12% year-on-year to Rs 5,146 crore, while Ebitda per tonne of cement rose to Rs 1,214 from Rs 1,198 a year ago, despite cost increases due to the West Asian crisis. “I want you to appreciate the stability it represents,” Daga said. “We absorbed and continue to absorb the sharpest imported fuel cost shock in recent memory during the quarter, on a volume base expanded by acquired assets that are still increasing system profitability,” he said. “We absorbed the shock better than any peer, and we recovered faster than any peer.”

Sales and capacity include India Cements and Kesoram Industries, which have now been fully converted to the Ultratech brand. “Our team has been able to convert customers who used to buy ‘B’ or ‘C’ series brands of cement to ‘A’ series brands of cement, who are willing to pay a premium,” said Daga. “I believe we will be far ahead of industry growth, translating directly into market share gains.”

With an annual production capacity of more than 200 million tonnes, Ultratech holds about 28% market share in the world’s second-largest market for building materials. The additional capacities will help the company increase its annual production capacity to over 212 million tonnes in the current financial year and over 242 million tonnes by the end of FY28.

The expansion plan involves a balanced combination of greenfield projects, brownfield expansion and debottlenecking opportunities, the company said in a statement.

Daga in the current quarter posted Rs. 130-140 per tonne had been guided for additional costs, which is usually the weakest due to monsoon rains. High costs include maintenance and high fuel costs, he said.

“Prices are expected to remain broadly stable during the monsoon quarter due to the impact of the increase in industry costs, which is frankly a constructive result for this time of the year,” he said.

Ultratech announced its earnings during market hours. Its stock rose 1.5% on the BSE to Rs. closed at 11,897.80.