UltraTech Cement Reports Q2 Earnings, Shares Drop 5% from Peak
Following a disappointing earnings report for Q2, UltraTech Cement shares fell significantly from their daily high.
UltraTech's Q2 net profit rose 21.3% to Rs 1,494 crore, below expectations.
Total expenses surged by 17.8%, driven by a 24% increase in raw material costs.
Despite challenges, domestic grey cement sales volumes increased by 13.8%.
On October 19, shares of UltraTech Cement experienced a decline of 5% from their peak earlier in the day, following the release of the company's second-quarter financial results. The largest cement producer in India reported a net profit of Rs 1,494 crore for the quarter ending September 30, which, while reflecting a year-on-year increase of 21.3%, fell short of analysts' expectations of Rs 1,705 crore.
The disappointing earnings were attributed to rising raw material costs, which surged by 24% during the quarter, leading to a total expense increase of 17.8%. As of 2:18 PM on October 19, UltraTech shares were trading at Rs 10,664, down from a high of Rs 11,219 earlier in the day. The company's operating EBITDA also saw a modest rise, reaching Rs 974 per ton, which is an increase of Rs 60 year-on-year.
Despite the challenges posed by the monsoon season and geopolitical tensions in West Asia, UltraTech reported a robust growth in domestic grey cement sales, which rose by 13.8% to 35.94 million metric tons. This growth was supported by a low base effect and an uptick in capital expenditure. The company’s consolidated revenue from operations increased by 18.8% to Rs 23,295.1 crore, compared to Rs 19,608.7 crore in the same quarter last year.
Analysts from Macquarie predict that Indian cement companies, including UltraTech, may implement further price hikes as construction activity is expected to gain momentum post the festive season. The company’s consolidated net sales also saw an 18.9% increase, reaching Rs 23,024 crore, highlighting its strong market position despite the external challenges.
Looking ahead, UltraTech Cement aims to continue its growth trajectory by focusing on disciplined execution and cost optimization. The company has improved its capacity utilization to 71%, up from 66% in the same quarter last year, reflecting its commitment to enhancing operational efficiency and expanding its market presence.
