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Informist, Thursday, Jan. 23, 2025

By Sunil Raghu

AHMEDABAD – Lower realisations and earnings before interest, tax, depreciation, and amortisation per tonne on a year-on-year basis, and relative sluggish growth in demand post the monsoon appear set to weaken the Oct-Dec earnings of cement makers. Add to that a largely failed attempt by cement makers to raise the selling prices of their products in Oct-Dec. The fortunes of Ambuja Cements Ltd are expected to be no different.

The cement maker is likely to report a 16.7% year-on-year fall in its consolidated net profit at INR 7.3 billion rupees on net sales of INR 84.3 billion, a fall of 11.9% year-on-year, according to the average of the estimates of eight brokerage houses. The revenue of Ambuja Cement for Oct-Dec 2023 was INR 81.3 billion, while the net profit was INR 8.2 billion. For Jul-Sept, the revenue was INR 75.2 billion and the net profit was INR 4.6 billion. 

On Wednesday, shares of Ambuja Cements closed 0.9% higher at INR 536.65 on the National Stock Exchange. At the current price, the stock is down about 5% from the day the company announced its September quarter earnings on Oct. 28. On the day of its September quarter earnings, the stock closed 3.1% higher at INR 570 per share. The next day, it opened at the same price as the previous day's close and ended 0.8% higher at INR 574.40.

The demand scenario appears so uncertain that there is little agreement even among analysts on the figures. Among the eight analysts, there is a huge variation in estimates, with Motilal Oswal Financial Services Ltd expecting Ambuja Cements to achieve a net profit of INR 5.8 billion for Oct-Dec, and Nuvama Wealth Management Ltd estimating the net profit at INR 10.2 billion.

As for Ambuja Cements' revenue for Oct-Dec, Nuvama sees it at INR 90.8 billion and with Kotak Institutional Equities Ltd estimating the number at INR 80.4 billion, the lowest among estimates.

Nuvama, which had the highest estimates for net profit, revenue and even EBITDA for Ambuja Cement in Oct-Dec, said in a report that the cement maker's volumes are likely to rise 20% on year, but overall EBITDA per tonne might fall to INR 976 from INR 1,228 in the same quarter of the previous year due to "weak realisations".

Motilal Oswal sees the consolidated volume for Ambuja Cements rising 11% on year and blended realisation down 8% on year. It pegs Ambuja Cements' consolidated EBITDA per tonne at INR 848, much lower than what Nuvama expects. Kotak Securities, on its part, sees volumes at 15.2 million tonnes, up 8% on year, led by inorganic growth. It expects costs per tonne to fall 3% on year due to what it calls "operating leverage" and moderate costs. It estimates Ambuja Cements' EBITDA per tonne at INR 876, down 29% on year but up 28% on quarter.

Meanwhile, the average estimate by eight analysts pegs Ambuja Cements' earnings before interest, tax, depreciation and amortisation, or EBITDA, at INR 14.4 billion, with a range of INR 13.3 billion-INR 16.4 billion.

The company is scheduled to detail its Oct-Dec earnings on Wednesday.

Following are the Oct-Dec earnings estimates for Ambuja Cements Ltd based on reports from eight brokerage firms in descending order of the estimate of net profit: 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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