UltraTech Cement reported a sharper-than-expected 36% decline in its net profit for the second quarter of FY25, amounting to ₹820 crore, compared to ₹1,280 crore in the same period last year. The drop was attributed to weak demand caused by monsoon-related project delays and a slowdown in construction activities, which affected price realisations. Analysts had projected a net profit of ₹1,062 crore for the quarter, based on a Moneycontrol poll of eight brokerage estimates.
Revenue and Sales Performance
The company’s revenue from operations in Q2 fell by 2.3% year-on-year to ₹15,635 crore, slightly better than the ₹15,579 crore forecast by analysts but lower than the ₹16,012 crore posted a year ago. Domestic grey cement sales volumes saw a marginal 3% growth, reaching 25.75 million tonnes, compared to the same period last year. However, this also marked a significant 15% decline from the April-June quarter, which was impacted by factors such as the General Elections, extreme heat, and labor shortages.
Factors Affecting Earnings
UltraTech Cement’s Q2 earnings were also hit by various factors, such as delay in the infra projects, flooding, and shortage of labourers during the monsoon season. The inability of the Company to take effective price hikes have subdued the prices of cement and lower realisations. For the July-September quarter, domestic grey cement realisations fell to ₹ 4,901 per tonne, down from ₹ 5,349 per tonne in the same quarter last year, and lower than the ₹ 5,045 per tonne seen in the April-June quarter. There is also a view that price improvements would be viable only in the latter half of the next financial year.
Operating Metrics and Margin
The company’s EBITDA for the quarter decreased by 18% to ₹2,239 crore, while the operating margin contracted to 13%, compared to 16% in the corresponding period last year. The reduced profitability reflected the continued struggle with low price realisations and higher input costs.
Stock Market Reaction
Following the results, UltraTech Cement’s shares traded 1% lower at ₹10,958.75 on the NSE at 1441 IST. Although the stock initially declined after the earnings release, it managed to recoup some of the losses.
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