UltraTech Q2 PAT may drop on weak prices & demand

Mumbai:

is seen reporting a high double-digit fall in the bottomline for the seasonally weak quarter ended September, weighed down by lower cement prices and higher input costs.

Estimates given by analysts show that the cement major’s consolidated net profit could fall up to 38% from the year-ago number of Rs 1,314 crore.

While the net profit is seen declining, the topline is expected to see a year-on-year (YoY) growth on the back of higher volume offtake.

Consolidated net sales are seen rising 12-20% on year from Rs 11,743 crore.

The Aditya Birla Group’s flagship company will report earnings on Wednesday.

Analysts see consolidated sales volume rising 8-11% on year from 21.6 million tonne. Although volumes have risen, the overall demand environment was weak, said analysts.

“Demand was weak in Q2 FY23 due to seasonal factors and is expected to improve as dry season approaches,” said

Capital Markets in its report.

The weak demand weighed down the prices of the construction material. All India cement prices have declined for four consecutive months between April-July. In September, cement companies raised prices, but prices have declined by an average of 3% sequentially at the pan-India level, said analysts.

The weak prices are likely to pull down the realisation per tonne for the country’s largest cement company by capacity.

Brokerage Kotak Institutional Equities expects blended realisations to decline by 4.3% sequentially.

The operational performance of the company will be hit by higher costs and lower realisation.

Kotak Equities estimates costs/tonne to increase 15.7% YoY and 3% QoQ, largely led by power-fuel costs. The earnings before interest, tax, depreciation and amortization (EBITDA) per tonne is expected to decline by a sharp 37% YoY and 33% sequentially to Rs 836 per tonne, it said.

While the overall earnings performance is expected to have been subdued, analysts see it improving in the current quarter. The question is whether UltraTech Cement, too, sees a brighter outlook for demand and prices.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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