UltraTech Cement Q3 Preview: Better Realisations, Lower Fuel Costs To Boost Profit
Net profit of the Aditya Birla Group's cement manufacturing company may jump 76% year-on-year to Rs 1,856.8 crore in the October–December period, according to Bloomberg consensus estimates.
UltraTech Cement Ltd. may report a robust third-quarter earnings, fuelled by increased profit amid improved realisations due to price hikes, reduced fuel expenses and cost optimisation leading to higher Ebitda per tonne.
Net profit of the Aditya Birla Group's cement manufacturing company may jump 76% year-on-year to Rs 1,856.8 crore in the October–December period, with the Ebitda margin improving by 450 basis points, according to Bloomberg consensus estimates.
UltraTech Q3 FY24 Preview: Bloomberg Estimates (YoY)
Revenue may rise 10.5% to Rs 17,149.34 crore.
Ebitda may rise 43.4% to Rs 3,348.4 crore.
Margin may rise to 15% vs 19.5%
Net profit may rise 75.5% to Rs 1,856.76 crore.
Volumes
UltraTech's consolidated volume grew 6% to 27.3 million tonne. India sales volume accounted for 95% of the total volumes, while grey-cement overseas volumes accounted for the balance 4.6%.
Better Realisations
Brokerages expect an average 65% profit growth in the December quarter. Volumes were below expectations, but higher realisations and lower input costs will lead to at least a 24% improvement in the Ebitda per tonne.
Emkay Global Financial Services Ltd., Systematix Group and Elara Capital Plc said realisations were expected to improve by 2%. Axis Securities pointed out that cement prices improved across India, largely in the eastern and southern regions in October.
The prices did correct in November due to a softer demand momentum amid the festive season and labour shortages, but still remained on an average 3% higher sequentially in the third quarter. Higher realisations and moderate volume growth will lead to an average revenue growth of 8.3% year-on-year.
Better Ebitda Per Tonne
UltraTech's Ebitda per tonne would be higher on an annual basis in the third quarter, according to the brokerages.
Cement companies would benefit from lower operating costs, led by lower fuel prices and internal cost-saving measures, according to Elara Capital. Power and fuel costs account for 30% of the total costs of UltraTech, with 90% of the power being sourced from imported coal and petcoke.
"Both domestic and international petroleum coke and coal prices have fallen by 30–40% YoY," Axis Securities said.
US pet-coke prices declined by $15–20 per tonne to $116 per tonne, giving a cost benefit of Rs 80–90 per tonne to cement companies, according to Emkay.
"Companies are making strides in cost-optimisation measures with emphasis on fuel and logistical efficiencies, coupled with advanced technology in the plants," Sytematix said.
On an average, brokerages expect a 38% improvement in the Ebitda. Emkay expects UltraTech's Ebitda per tonne to be in the range of Rs 1,150–1,160 apiece. Systematix expects the metric to improve by Rs 296 per tonne.
