UltraTech Cement reported 13.7% decline in its December quarter net profits to ₹393.67 crore, due to higher input costs and higher interest cost due to acquisition of Binani Cements.
The dip in profits were reported in spite of a 19% increase in net sales to ₹9,389.62 crore from ₹7,900.38 crore over the previous year. The company’s domestic sales volume jumped 15% during the quarter. “Higher fuel and energy costs, coupled with rupee depreciation resulted in costs increasing by 11% over Q3FY18. Additionally, interest costs are higher due to the loans raised for the acquisition of UNCL,” UltraTech said in a statement.
The company completed its acquisition of Binani Cement Limited (BCL) on November 20, 2018.
“Upon infusion of funds by the Company; taking over management control and re-constitution of the Board of Directors, BCL has become a wholly owned subsidiary of the company with effect from 20th November, 2018. BCL has been re-named as UltraTech Nathdwara Cement Limited (UNCL), from 13th December, 2018,” a company statement said adding that UltraTech has successfully integrated the 21.2 mtpa cement capacity acquired in 2017.
Profit before interest, depreciation and tax increased by 3.6% to ₹1,548 crore, compared with ₹1,494 crore in the year ago period.
“Demand is witnessing an upward movement with higher spends on infrastructure and government sponsored housing program. With the additional capacities acquired by the company through the organic and inorganic route and its rapid ramp-up, UltraTech is very well placed to participate in the growth of the economy,” the statement said.
Paras Bothra, president - Equity Research at Ashika Stock Broking, believes that the results are below expectations. “There is still pricing pressure in the cement sector. The increase in input cost costs results in fall in EBITDA margins by 120 basis points. Moderation in petcoke and crude prices should lift Q4 results,” Mr. Bothra said.
UltraTech shares on the BSE declined 1.54% to close at ₹3,790.25 in a firm Mumbai market on Thursday, valuing the company at ₹1,04,094.19 crore.
