Workers prepare cement at a hydroelectric dam construction site in Laos. (Photographer: Taylor Weidman/Bloomberg)

Q1 Results: UltraTech Cement’s Profit Meets Estimates, Margins Contract In June Quarter

UltraTech Cement Ltd.'s profit declined due to rising costs in the June-ended quarter but matched analyst estimates.

Net profit stood at Rs 598 crore, according to the company's exchange filing. That's higher than the Rs 581.3 crore expected by analysts tracked by Bloomberg. The company’s profit was hit by higher power and fuel, finance, and depreciation costs arising from its merger with Jaiprakash Associates Ltd. Total expenses also increased nearly 21 percent to Rs 8,186 crore.

At Rs 8,655 crore, the company’s revenue also met the Bloomberg consensus estimate aided by 34 percent year-on-year rise on sales volumes, primarily due to the acquisition of Jaiprakash Associates’ cement business. Volumes stood at 17.5 million tonnes for the June quarter.

Demand will remain healthy, UltraTech said in the filing, as the cement industry is in an “up-cycle” driven by higher government allocation for infrastructure and rural development, increased rural housing demand as a result of the increase in minimum support price for kharif crop and pre-election spending.

Earnings before interest, tax, depreciation and amortisation came in at Rs 1,623.8 crore, ahead of analyst expectations. Operating margin also surpassed estimates at 18.8 percent.

Shares fluctuated between gains and losses after the earnings announcement. The stock has fallen 9.3 percent in 2018 so far, compared to a 7.6 percent rise in the S&P BSE Sensex Index.

The financial results include those for cement plants acquired from JP Associates and JP Cement Corporation on June 29 and hence the results for June quarter are not comparable with the corresponding quarter last year.