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Informist, Monday, Jun. 9, 2025

 

By Rajesh Gajra

 

NEW DELHI – The quarterly bottom line performance of the four major cement companies that are part of the Nifty 200 has been in a flip-flop mode. In the March quarter, these companies reported a year-on-year decline of 1.3% in their cumulative net profit, a sharp turnaround from a strong 24% growth reported in the December quarter. The cement companies' December quarter performance itself saw a sharp bounce-back from the preceding September quarter, when the net profit had fallen steeply by 40% on year.

 

A sharp rise in raw material costs, purchases of stock-in-trade, depreciation and amortisation charges, other expenses, and exceptional items were a drag on the bottom line of the four cement companies--UltraTech Cement Ltd., Ambuja Cements Ltd., ACC Ltd., and Shree Cement Ltd--in the March quarter. As a result, the aggregate net profit fell 3.4% on year, and after adjusting for exceptional items, the net profit was down 1.3%. A moderate increase in aggregate power and fuel expenses of the cement companies partly buffered the fall in their net profit.

 

Although the fall in net profit in the March quarter was lower than the Street's expectation on the sector of a 4.3?ll, it was a sharp deterioration over the December quarter's aggregate net profit growth of 24%. The December quarter performance was also a recovery over the preceding Jul-Sept quarter, when the net profit fell by a steep 47%. Excluding exceptional items, the four cement companies' aggregate net profit in the September quarter fell 40%.

 

The cement companies' top line performance in the March quarter was, in contrast, stable and even robust. The aggregate revenue from operations rose 11.2% on year in the March quarter, the best growth in six quarters. This was primarily led by volume growth due to recent acquisitions by UltraTech and Ambuja Cements, a slight pick-up in demand, and stabilising cement prices.

 

UltraTech Cement and Ambuja Cements beat analyst expectations on the sector in terms of the adjusted net profit, while ACC and Shree Cement missed this estimate. With respect to the sectoral estimate of 9.2% growth in revenue from operations, barring Shree Cement, the other three recorded higher revenue growth.

 

Against analysts' estimate of a 0.8% net profit for Nifty 200 companies in the March quarter, only UltraTech Cement was the outperformer, while the other three cement companies underperformed. Vis-a-vis the Street view of a 5.2% revenue growth for Nifty 200 companies, barring Shree Cement, the other three companies beat the estimate on their reported revenue from operations.

 

INDIVIDUAL COMPARISON

Individually, barring UltraTech Cement, the other three cement companies surpassed analyst expectations on their respective net profits for the March quarter. On the other hand, against individual revenue from operations estimates, only Ambuja Cements' revenue growth fell short and the rest of the cement companies in the analysis outperformed.

 

In the case of UltraTech Cement, the reported consolidated adjusted net profit growth of 6.9% on-year in the March quarter was below the Street estimate of 9.5%. But after including exceptional items, the company's net profit growth was higher at 9.9%.

 

UltraTech Cement's net profit performance was helped by a consolidated revenue growth of 13% on year, higher than the Street's estimate of 11%. The revenue of the company was driven by a 17% rise in consolidated volume on the back of incorporation of cement volume numbers from the recently-acquired Kesoram Industries Ltd.'s wholly-owned Kesoram Cement Ltd., and buying a controlling stake in The India Cements Ltd. Excluding these two recent acquisitions, UltraTech's like-for-like volume growth was only 5%. The like-for-like volume growth was helped by a 19% rise in white cement sale volume from overseas plants, and a domestic ready-mix concrete sales volume growth of 30%.

 

UltraTech's net profit performance in the reporting quarter was helped by a sharp fall of 27% on year in the total tax expenses. These expenses made up for 20% of the company's profit before tax. The company also benefitted from a moderate increase of 8% in power and fuel costs, which had a 26% share in total expenses. On the other hand, a sharp rise in other key input costs was a drag on the bottom line growth of the company. There was a 24% rise in the cost of materials consumed, which made up for 18% of the total expenses. The other expenses, which account for 14% of total expenses, jumped 20%.

 

Ambuja Cements and ACC are part of the Adani group companies, which hold a 67.6% stake in the former. Ambuja Cements holds the major promoter shareholder stake of 50.1% in ACC, and two other Adani group companies hold a further 6.6%. The Street had expected a 3.6?ll in consolidated net profit of Ambuja Cements, but the company reported a 2.1?ll in adjusted net profit. The better-than-expected performance was largely due to exceptional items, since after including these items, the net profit was down 9%.

 

Ambuja Cements' net profit performance was largely aided by the 11.2% on-year revenue growth of the company in the March quarter, which was, however, slightly below the Street estimate of 11.4%. Revenue growth was largely on account of 12.7% growth in consolidated cement volume, which was helped by 12.5% increase in volume growth from the recently-acquired Sanghi Industries' cement assets, and a ready-mix concrete volume growth of 30%. Ambuja Cements' adjusted net profit show was also aided by a 2.5 times rise in other income.

 

In the case of ACC, analysts had estimated its consolidated net profit to fall 34% on year in the March quarter, but the reported net profit fell 20% and the adjusted net profit fell 14%. The net profit performance benefitted from a 12% on-year rise in revenue as against the Street estimate of 8%. The company reported a 13% rise in cement sales volume and a 30% jump in sales volume of ready-mix concrete in the reporting quarter.

 

ACC's net profit performance was also helped by a substantial rise of 62% in other income, with the share of other income to total revenue being 3.1%. A fall of 11% in power and fuel costs, which made up for 16% of the total expenses, also buffered the impact of jump in other cost items and the resulting fall in adjusted net profit. A lower increase of 4.8% in employee benefit expenses, which made up for 3.2% of total expenses, and a moderate increase of 6.3% in other expenses, which contributed 9.8% to total expenses, also helped the company's net profit performance in the latest quarter.

 

For Shree Cement, analysts had estimated a 22% on-year fall in net profit, but the reported adjusted net profit fell 16%. The company's net profit performance was buffered by a volume-driven revenue growth of 3.3%, a fall of 19% in power and fuel costs, which accounted for 25% of total expenses, and a rise of 9% in other income. The company's revenue from operations increased 3.3% in Jan-Mar, in sharp contrast to analysts' estimate of a 0.6?cline.

 

The following table shows the March quarter performance of the four companies in the cement sector vis-a-vis the consensus estimate for each company as well as against the consensus estimate for the cement sector and the Nifty 200 index:

 

Company	PAT beat analysts' estimate	Adjusted PAT growth %	PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate	Revenue beat analysts' estimate	Revenue growth %	Revenue growth estimate %	Revenue beat sector estimate	Revenue beat Nifty 200 estimate
Cement sector		-1.3	-4.3				11.2	9.2
Nifty 200			0.8					5.2
ACC	Yes	-13.7	-33.8	No	No	Yes	12.2	8.2	Yes	Yes
Ambuja Cements	Yes	-2.1	-3.6	Yes	No	No	11.2	11.4	Yes	Yes
Shree Cement	Yes	-16	-21.9	No	No	Yes	3.3	-0.6	No	No
UltraTech Cement	No	6.9	9.5	Yes	Yes	Yes	13	11	Yes	Yes

 

 

The following table shows the profit margins of the cement companies that are a part of the Nifty 200:

 

Company	Adjusted PAT Margin for Mar-25	Adjusted PAT Margin for Mar-24	Adjusted PAT Margin for Dec-24
Cement sector	10.13%	11.42%	12.87%
ACC	10.16%	13.20%	18.42%
Ambuja Cements	8.31%	9.43%	22.68%
Shree Cement	10.61%	13.05%	5.42%
UltraTech Cement	10.80%	11.41%	7.65%

 

End

 

Edited by Tanima Banerjee

 

 

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