UltraTech Cement, an Aditya Birla Group company has posted a 6% decline in its profits for the June quarter at Rs 683 crore Q-o-Q, mainly on the back of poor pricing power and lower volume growth. Sales of the company dipped 3% at Rs 4,365 crore. The results are little ahead of CNBC-TV18 poll which saw sales at Rs 4,225 and PAT at Rs 509 crore.
UltraTech in a statement said the quarter was adversely impacted by the 30% increase in the domestic coal price in March. Alongside, imported coal price rose by 30% Y-o-Y resulting in a substantial escalation in costs.
The cement major in a filing to the Bombay Stock Exchange (BSE) said, “The surplus scenario is likely to continue over the next 2 to 3 years resulting in the selling prices remaining under pressure. With commodity prices rising, input costs will be affected, which will squeeze margins.”
Shares of the company surged 1.58% at Rs 1,016 on the BSE post the announcement of the results. But there could be little reason for investors to cheer as analyst have their concerns for the company and cement industry as a whole, going forward.
“Rise in power and fuel cost Q-o-Q may hamper margins. Even dispatch figures are likely to come down as infrastructure activities are at a standstill,” said an analyst.
Despite cost pressures continue to haunt the cement industry in general; there are some positives at UltraTech to look forward to. The company has lined up a capex outloay of over Rs 11,000 crore for next three years which includes brownfield expansion at Chhattisgarh and Karnataka.
Source: www.moneycontrol.com
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Gaurav Agarwal
Head Dealer
DENIP consultants Pvt Ltd
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