UltraTech Cement Q1 Preview: Margin To Expand On Lower Base Despite Profitability Hit
While Ebitda per tonne and company realisations may take a hit due to weak pricing, UltraTech's volume and margin are expected to grow.
UltraTech Cement Ltd. may post a growth in profit during the first quarter of fiscal 2025, despite sequential price weakness in the industry, which could impact the company's realisations and Ebitda per tonne.
Net profit of the Aditya Birla Group's cement manufacturing company may surge 8.2% year-on-year to Rs 1,828.47 crore in the April–June quarter, according to consensus estimates of analysts tracked by Bloomberg.
UltraTech Q1 FY25 Bloomberg Earnings Estimates (YoY)
Revenue may rise 3.7% to Rs 18,388.2 crore versus Rs 17,737.1 crore.
Ebitda may increase 11.6% to Rs 3,404.25 crore versus Rs 3,049.18 crore.
Margin may expand 240 basis points to 20.2% versus 17.8%.
Net profit may rise 8.29% to Rs 1,828.47 crore versus Rs 1,688.45 crore.
Volume
Emkay Research expects UltraTech Cement's volume growth to outperform the industry. The brokerage expects the cement manufacturer to register volume growth of 5% on an annual basis, owing to the recent capacity expansion and continued market share gains.
Nuvama Research concurred and expects the company to see a 7% year- on-year volume growth in the quarter ended June 2024.
Dip In Realisations
As per brokerages, pan-India average cement prices are likely to have declined 3-4% on a quarter-on-quarter basis in Q1 FY25. This would lead to lower sales realisations. This is a key factor which could lead to revenue of the company growing at low single-digits despite better-than-industry volume.
Emkay Research expects UltraTech Cement's realisations to decline 5% and 3% on an annual and sequential basis, respectively. Nuvama Research expects the blended realisations to fall 2% quarter-on-quarter on account of the weak pricing environment.
Lower Ebitda Per Tonne
According to Emkay Research, the sustained drop in cement prices sequentially, coupled with negative operating leverage, will impact the Ebitda per tonne for cement players in the industry. However, it expects UltraTech Cement to maintain an Ebitda per tonne of over Rs 1,000.
The brokerage expects the blended Ebitda realisations to fall 2% and 15% on an annual and sequential basis, respectively. It would get some support from declining cost per tonne, which the brokerage expects to fall 5% on a year-on-year basis.
While the Ebitda per tonne might see some fall during the quarter, the overall margin of the company stands to improve on an annual basis due to a lower base, said Nuvama Research.
The brokerage expects UltraTech Cement's margin to expand over 180 basis points.
