UltraTech Q4 results: Profit falls 36% to ₹1,666 cr

Net profit of India's largest cement producer UltraTech Cement slumped 36% year-on-year to ₹1,666 crore for the quarter ended March, dragged down by elevated prices of pet coke and coal. This compares with a net profit of ₹2,620 crore in the corresponding period last year.

Revenue from operations rose 18% to ₹18,562 crore in the fourth quarter as against ₹15,767 crore reported in the year-ago period.

The company's board recommended a dividend of 380% at the rate of ₹38 per equity share.

UltraTech's operating profit stood at ₹3,444 crore in Q4 FY23 as compared with ₹3,165 crore in the corresponding period of the previous year.

For the full year, consolidated net sales jumped 21% year-on-year to ₹62,338 crore in FY23 from ₹51,708 crore in the previous fiscal. The cement maker witnessed an increase in energy cost by 17% year-on-year, according to its earnings report. Prices of pet coke and coal increased 18% year-on-year. Raw material cost was up 9% year-on-year on account of increase in the cost of fly ash, slag and gypsum etc.

The company registered 100 million tonnes of production, dispatches and sales in FY23, backed by an effective capacity utilisation of 95% during this quarter and 84% capacity utilisation for the year.

UltraTech said its expansion programme is progressing as per schedule. During the year, the company commissioned 12.4 mtpa additional capacity of grey cement. It has further commissioned a 2.2 mtpa brownfield cement capacity at Patliputra on April, 23. Work on the next phase of growth of 22.6 mtpa has already commenced, the company said. Commercial production from these new capacities is expected to go on stream in a phased manner by FY25-26.

Upon completion of these expansions, the company's capacity will grow to 160.45 mtpa.

Demand for cement across all sectors continues to remain strong, said UltraTech.

According to Moody’s Investors Service, India's infrastructure-led investments, mass residential projects, and broad-based economic growth will keep cement demand solid.

The country's cement production will climb by around 6%-8% over fiscal years 2023 and 2024, following a 21% jump for the fiscal year ended March 2022, the rating agency said in a report in February.

"A growing housing sector, which typically accounts for 60%-65% of India's cement consumption, will remain a key demand driver. Also, continued large investments in roads and infrastructure projects will fuel cement demand," Moody's said.

In the Union Budget 2023-24, the government allocated $1.8 billion for the creation of safe housing, clean drinking water and sanitation, and increasing road and telecom connectivity, among other initiatives. The government also allocated $9.6 billion to address urban housing shortages.

While cement demand remained solid in the world's second-largest cement market for most of 2022-23, profitability slid sharply, largely owing to elevated costs of pet coke, coal and diesel, the rating agency said, adding that a sequential, quarter-on-quarter, decline in these costs will prevent a further sharp decline in profitability.