Ambuja Cements Q1 Results: Standalone Profits Beat Consensus Estimates By 10%
Ambuja Cement's consolidated and standalone cement and clinker sales volumes, both saw over a 2% uptick in Q1FY25.
The Adani Group-owned cement manufacturer posted a profit of Rs 571 crore in the quarter ended June, according to an exchange filing on Wednesday. Analysts tracked by Bloomberg had a consensus estimate of Rs 519 crore. The stock price saw a spike of over 2% after the earnings numbers were declared on the exchanges.
Ambuja Cements Ltd.'s standalone net profit fell 11.5% on a year-on- year basis in the first quarter of the current financial year.
Ambuja Cements Q1 FY25 Highlights (Standalone, YoY)
Revenue down 4.5% to Rs 4516 crore (Bloomberg estimate: Rs 4738 crore).
Ebitda down 31.9% to Rs 646 crore (Estimate: Rs 796.6 crore).
Ebitda margin narrowed to 14.3% vs 20.1% (Estimate: 16%).
Net profit down 11.5% to Rs 571 crore (Estimate: Rs 519 crore).
On a consolidated basis, Ambuja Cement's net profit for the quarter stood 30% lower on a year on year basis, but beat Bloomberg consensus estimate of Rs 742.6 crore. Margins contracted by 372 basis points to 15.39%.
The weakness in the first quarter earnings are mainly on the back of the weak pricing environment seen in the Indian cement industries, which has impacted companies across the board.
Sales Volume
Ambuja Cement's consolidated and standalone cement and clinker sales volumes, both saw over a 2% uptick in Q1FY25.
When talking about the future outlook of the Indian cement industry, the company's press release stated that India's cement demand is likely to grow by 7% to 9% in FY25 to around 451 million tonnes per annum. Factors driving future growth include the cement industry's strong correlation with GDP
growth as well as rising demand from housing and infrastructure sectors.
The government's aims to invest $3 trillion in infrastructure and housing development through the ongoing 'Housing for All' scheme, National Infrastructure plan, PM Gati Shakti National Master plan and others, are set to bring buoyancy to cement demand, stated the company.
Capacity
The company's acquisition of Penna Cement's assets is expected to close by Q2FY25. The closing of this transaction will enable Ambuja Cement's total capacity to go to 89 million tonnes per annum, stated Ajay Kapur, Whole Time Director and CEO of the company. Kapur also added that the company is well on track to achieve its 140 million tonne per annum capacity target by FY28.
Cost Reduction Plans
Kapur stated that the company's continued improvement on cost savings, brings visibility of achieving the targeted cost reduction of Rs. 530 per million tonne by FY28.
The company's kiln fuel costs reduced by 17% to Rs 1.73 per thousand kilocal in Q1FY25.
Furthermore, the green power share of the cement player now stands at 18.4%. The company aims to improve this number to 31% by FY25 and 60% by FY28. This would help in reduction in overall power costs by 33% for the company, which help boost the Ebitda metrics in the future.
