Ultratech Cement Q2 results fail to stir exuberance, closes flat despite 15 per cent growth in sales

Consolidated revenue stood at Rs 12016 crore for the quarter, a 15.69 per cent growth compared to the same quarter last year.

UltraTech Cement Ltd, India’s largest selling cement brand and the world’s third-largest cement manufacturer (excluding China) with a consolidated annual capacity of 116.8 million tons, has declared its results for the second quarter of FY 2022 today. 

The sales volume logged 21.64 MNT during the quarter showing a growth of 8 per cent on a YoY basis, largely driven by domestic operations, whereas exports showed a decline of 45 per cent on a YoY basis. Weak export figures did not significantly impact the overall performance of the domestic driven sales volume, accounting for about 95 per cent of the total sales value. Consolidated revenue stood at Rs 12016 crore for the quarter, a 15.69 per cent growth compared to the same quarter last year. 

Although the company has shown a strong topline, the same growth story did not translate in the bottom line due to higher raw material cost (increased 3 per cent YoY), energy cost( increased 17 per cent YoY) and logistics cost( increased 7 per cent YoY). EBITDA for the second quarter rose to Rs 2715 crore as compared to Rs 2698 same quarter last year, a meagre increase of 0.63 per cent. PAT increased by 12.28 per cent at Rs 1310 crore against Rs 1167 crore same quarter last year.

The EBITDA margin of the cement maker stood at 22.59 per cent with a loss of 338 bps on a YoY basis. Despite reduced EBITDA margins operational efficiencies partially offset the negative impact of increased output and freight costs. PAT margins were at 10.90 per cent with a decline of 33 bps on a YoY basis. 

The quarterly figures fell below the market’s expectation even though traditionally, the reported quarter is considered to be seasonally weak for cement companies as most construction work around the country slows down due to monsoons.

The coal shortage added to the woes of the company which it is confident to weather with its commitment to be on track to achieve a green energy mix of 34 per cent by 2024 and reduce its carbon footprint at a concrete level. 

“UltraTech is confident of weathering the storm of increase in the price of coal, diesel and other inputs, with its sustainable efficiency improvement programs and increasing selling prices to absorb higher costs,” the company said in an exchange filing.

The shares of Ultra tech Cement were at Rs 7397.70 at the closing bell on Monday, October 18, 2021.