UltraTech Cement Q3: Profit Soars 67% YoY, Cement Sales To Grow As Govt's Infra Expenditure Rises

UltraTech Cement, the leading player in the Indian cement industry, has reported a healthy performance in the third quarter of FY24, posting a 67% surge in net profit. The company's financials surpassed expectations, buoyed by strong demand for building materials and effective cost management.

In a statement released on January 19, UltraTech Cement disclosed that its net profit for the three months ended December soared to Rs 1,774.78 crore, marking a significant leap from Rs 1,062.58 crore recorded in the same period a year ago. The performance exceeded analyst projections.

The revenue from operations also demonstrated growth, climbing 7% to Rs 16,739.97 crore. On a sequential basis, revenue witnessed a 4.5% uptick, while profit surged by 38.6%.

Cement sales are anticipated to continue their upward trajectory, propelled by increased government spending on infrastructure, rural development, and a surge in demand from the housing sector. Fitch Ratings had earlier predicted India's cement demand to grow by 6% to 8% over the next few years, citing the government's emphasis on infrastructure growth and the subsequent rise in urban housing demand.

Despite a slowdown in cement demand during December due to state elections, floods in certain southern regions, and a construction ban to curb air pollution, UltraTech Cement managed to safeguard its margin. Lower fuel and raw material prices played a crucial role in offsetting the impact of price dips observed in the October-December quarter.

During the second quarter of FY24, cement manufacturers saved Rs 80-100/tonne due to lower fuel costs. Analysts expect the upcoming quarters to witness a double advantage-stable input prices, recent price hikes, and the benefits of operating leverage.

UltraTech Cement, a flagship company of the Aditya Birla Group, announced in November its plan to acquire the cement business of the BK Birla Group's Kesoram Industries in an all-stock deal. This strategic move will provide UltraTech with access to two integrated cement manufacturing units in Karnataka and Telangana, boasting a combined capacity of 10.75 million tonnes per annum.

The company already holds a consolidated capacity of 138.39 million tonnes per annum of grey cement, according to its official website. With India's installed cement capacity at 541 million tonnes, as per the Cement Manufacturers' Association, UltraTech Cement remains a key player in the industry.

UltraTech Cement shares were trading with gains of more than 1% at Rs 10,018 per share as of 2 pm on the National Stock Exchange. Over the last year, the stock has witnessed a surge of over 35%.

UltraTech Cement's Q3 performance, marked by a substantial profit surge and strategic moves for capacity expansion, positions the company as a key player in India's thriving cement industry. With favourable market conditions and a robust growth outlook, UltraTech Cement seems poised for continued success further.