UltraTech Cement Q2 Results Preview: Seasonally Weak Quarter To Impact Earnings

UltraTech Cement Ltd. is expected to post weak second-quarter results. The weak pricing environment and muted demand due to the monsoon season are the key drivers for the expected downtick in revenues and net profits.

Net profit of the Aditya Birla Group's cement manufacturer may fall over 18% year-on-year to Rs 1,039.24 crore in the July–September quarter, according to consensus estimates of analysts tracked by Bloomberg.

• Revenues may fall 1.88% to Rs 15,711.18 crore.

• Ebitda may fall 9.3% to Rs 2,314.22 crore.

• Margins may expand 670 basis points to 14.7% versus 8%.

• Net profit may fall 18.9% to Rs 1,039.24 crore.

India's cement demand was disappointing in July and August due to erratic monsoons, slow construction, and labour shortages, according to Nuvama. Although demand picked up in September, the brokerage anticipates flat to slightly negative volume growth for the second quarter of fiscal 2025.

Due to this muted demand scenario, Nuvama and Citi expect UltraTech Cement's volumes to rise 2% and 5% year-on-year, respectively.

Indian cement prices fell for nine consecutive months from November 2023 to July 2024, prompting the industry to raise prices by Rs 10 to 20 per bag between August and September 2024, as per Motilal Oswal. However, the industry only maintained a partial increase of Rs 5 to 6 per bag across all regions. As a result, all-India average cement prices declined by 7% annually and 1% sequentially in the quarter ended September 2024.

This weak pricing environment could harm UltraTech's gray realizations sequentially by 2.4%, according to Nuvama. Lower sales realisations could lead to the company's Ebitda per tonne falling to Rs 876 compared to Rs 956 a year ago, stated the brokerage.

Citi expects an even greater drop in Ebitda per tonne to Rs 764, marking an 18% year-on-year fall. Motilal Oswal expects the company's Ebitda to decline 15% year-on-year.