(Reuters) – India’s Ramco Cements on Thursday posted a 97% slump in third-quarter adjusted profit, hurt by a drop in prices of the key construction material.
Profit before exceptional items and tax for the company’s cement business fell to 43.5 million rupees ($496,774) during the October-to-December period from 1.35 billion rupees a year earlier.
The company reported a one-time gain of 3.29 billion rupees from the sale of its surplus land and investments, it said.
Revenue from the cement business fell 6% on-year to 19.77 billion rupees, below analysts’ average expectation of 20.19 billion rupees, according to data compiled by LSEG.
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KEY CONTEXT
Cement prices have been falling for most of last year, but showed signs of recovery in the reported quarter. Still, at the end of the December-quarter – a seasonally weak one as the pace of construction activity slackens – the average pan-India cement price was 11% lower on-year.
In south India, Ramco’s key market, the price drop was even higher at 14%, it said, as increased dealmaking in the region spurred competition.
Cement makers have reported a mixed set of earnings for the December quarter.
Market leader UltraTech and its closest rivals, the Adani group-owned Ambuja and ACC, have benefitted as their acquisition sprees have helped bolster volumes.
However, smaller peers such as Shree Cement and Dalmia Bharat have been hit by low prices.
PEER COMPARISON (WITH OTHER SOUTH REGION-FOCUSSED CEMENT MAKERS)
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth(%) growth(% rating* analyst price yield
) s target** (%)
Ramco Cements 37.82 13.89 10.09 54.48 Hold 21 0.99 0.28
Dalmia Bharat 36.30 11.84 8.83 41.50 Hold 28 0.99 0.48
India Cements – 28.81 12.34 – Sell 3 1.08 –
Orient Cement 31.63 15.06 7.31 39.90 Sell 5 1.41 0.66
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER-DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.5650 Indian rupees
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Mrigank Dhaniwala)
