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Informist, Monday, Apr. 21, 2025

 

By Rajesh Gajra

 

NEW DELHI – The year-on-year earnings performance of India's largest cement producer, UltraTech Cement Ltd., for the March quarter will likely be a mixed bag. The cement volume may have grown in double digits due to volume from recent acquisitions, and a marginal pick-up in cement demand in the country during the quarter. Excluding the volume from recent acquisitions, UltraTech's on-year cement volume growth will likely be in single digits.

 

In March 2024, UltraTech had concluded the acquisition of Kesoram Cement Ltd., a wholly-owned subsidiary of Kesoram Industries Ltd. and which has cement factories in Telangana and Karnataka, in an all-share deal. The company had also acquired a majority stake in The India Cements Ltd., which became its subsidiary in December.

 

The Kumar Mangalam Birla group company likely got better realisation on the cement it sold in the March quarter compared to the previous quarter due to increase in cement prices across regions. However, on an on-year basis, the realisation would have been lower. But the company's revenue may have still grown on the back of modest like-to-like volume growth and additional volume from the recent acquisitions.

 

The profitability is seen up due to a decline in operating costs, and the bottom line will track this growth. But some analysts expect higher depreciation, and a rise in interest costs, to restrict the bottom line growth.

 

UltraTech Cement will likely report a consolidated net profit of INR 25.51 billion in the March quarter, up 13% on year and 74% sequentially, according to the average of estimates of 14 brokerages. The consolidated revenue from operations is seen increasing 11% on year and 32% sequentially to INR 226.70 billion.

 

The highest net profit estimate is INR 33.30 billion by Systematix Shares and Stocks (India), while the lowest is INR 20.84 billion by Nuvama Wealth Management. The revenue estimates range from a low of INR 207.39 billion by Prabhudas Lilladher to a high of INR 240.78 billion by HDFC Securities. Further, the company's earnings before interest, tax, depreciation, and amortisation for the March quarter is seen at INR 44.87 billion.

 

In the December quarter, the company's consolidated revenue from operations increased 2.7% on year and 10% sequentially to INR 171.93 billion, while the consolidated net profit fell 17% on year but rose 79% sequentially to INR 14.70 billion.

 

Analysts' estimates on UltraTech's on-year volume growth in the March quarter vary from a low of 5-8% to a high of 15-19%. According to brokerage Motilal Oswal Financial Services, UltraTech's volume would have likely risen 19% on year "aided by inorganic growth," but "on a like-to-like basis" the volume growth is estimated at around 8%.

 

UltraTech's "grey cement volumes are likely to rise (around) 9% YoY (year-on-year), brokerage Nuvama Wealth Management said in its preview report, but did not specify whether this included volume from the recent acquisitions. Similarly, brokerage Prabhudas Lilladher estimates a 6% on-year volume growth for the cement major "on uptick in demand and (due to the company) having the highest market share," but it did not clarify whether its estimate includes volume from the recent acquisitions.

 

Brokerage YES Securities said in its preview report that it estimates a volume growth of 5.3% on year for UltraTech, and said that its grey cement volume assumption includes "volume contribution from India Cements and Kesoram." The cement major's volume will likely rise 15% on year "led by inorganic capacity additions", Kotak Institutional Equities said, referring to the addition of volume from Kesoram Cement and India Cements to the total India volume of UltraTech.

 

The like-to-like revenue growth of the cement major, on a year-on-year basis, will lag the volume growth in the March quarter due to lower cement selling prices. Brokerage Motilal Oswal expects the company's blended realisation to decline 5% on year, while Kotak sees it declining 1.6%.

 

The profitability may go up for UltraTech in the March quarter due to lower operating and variable costs. According to brokerage Motilal Oswal, the operating expenses per tonne is likely to decline 5% on year and the variable costs per tonne will likely decline 7%. The company's earnings before interest, tax, depreciation, and amortisation per tonne will inch up 2.4% on year, as per data in the brokerage's preview report. This profitability parameter will likely record a 1% on-year increase, according to Prabhudas Lilladher.

 

A 27% on-year estimated increase in depreciation cost and an estimated jump of 2.26 times in interest expenses will likely weigh on UltraTech's net profit, according to Motilal Oswal. The brokerage said the company's "adjusted PAT (profit after tax) is expected to increase 6% YoY."

 

The company will detail its March quarter earnings on Apr. 28. Post-announcement of the results, investors and analysts will seek management's commentary on sustainability of the demand pick-up and the outlook on cement prices going forward.

 

On Monday, shares of UltraTech Cement closed 0.3% up at INR 11,934 on the National Stock Exchange.

 

Following are the Jan-Mar consolidated earnings estimates for UltraTech Cement Ltd. based on reports from 14 brokerage firms in descending order of estimate of net profit:

 

Brokerage firm	Net Sales	Net Profit	EBITDA
	(In INR million)
Systematix Shares and Stocks (India) Ltd	222,800	33,300	43,700
Nomura Equity Research	226,369	30,024	47,089
Kotak Institutional Equities	224,776	27,039	46,158
Nirmal Bang Equities Pvt Ltd	215,996	26,791	45,542
Prabhudas Lilladher Pvt Ltd	207,388	26,066	43,009
ICICI Securities Ltd	236,601	25,322	47,005
JM Financial Institutional Securities Pvt Ltd	239,399	25,151	47,448
InCred Research Services Pvt Ltd	236,638	24,630	45,079
Elara Securities (India) Pvt Ltd	235,154	24,429	45,120
Motilal Oswal Financial Services Ltd	230,400	24,400	46,100
YES Securities (India) Ltd	211,379	23,423	42,214
HDFC Securities Ltd	240,783	23,012	44,816
Equirus Securities Pvt Ltd	219,694	22,676	43,030
Nuvama Wealth Management Ltd	226,403	20,841	41,938
Average	226,699	25,507	44,875

 

 

End

 

Edited by Tanima Banerjee

 

 

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