By Hritam Mukherjee
(Reuters) -UltraTech, India’s top cement maker by capacity, signalled better core profit in upcoming quarters as the market absorbed price hikes and demand picked up, after it reported an earnings beat on Thursday on strong volumes.
“We expect earnings before interest, taxes, depreciation and amortization (EBITDA) to further improve going forward,” finance chief Atul Daga said in a post-earnings conference call.
The comments echo those of smaller peer Dalmia Bharat, which said it was confident about a stronger performance in the upcoming quarters.
Cement prices improved in January, extending their rise from December, Daga said, adding that the pricing “lull has ended”.
The average cement price in India, which have been falling for the most of last year, improved in the reporting quarter as the market absorbed price hikes after earlier such attempts were rolled back.
However, data from brokerages Ambit and Nomura showed that they were still about 11% lower on-year.
Volumes grew 11% – higher side of the 8.4%-11% range estimated by four brokerages – cushioning the hit from the depressed prices.
Cement demand is “opening up,” Daga said, adding that government capex programmes have gained momentum since end of last month.
UltraTech’s upbeat results – a smaller-than-expected 17% profit fall and a revenue beat – drove its shares to close 8% higher. It also lifted cement stocks of its nearest rival, the Adani Group – Ambuja and ACC – by 2%.
“UltraTech’s good set of numbers are being seen as signs of improvement in the sector, and is assuaging investors that the worst, in terms of cement demand and prices, may be behind,” said Ashutosh Murarka, a research analyst with Choice Broking.
The company’s focus will be on turning around subsidiary India Cements, which had reported a wider loss earlier this week, by boosting capacity utilisation levels, Daga said.
($1 = 86.4820 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Rashmi Aich and Janane Venkatraman)
