By Hritam Mukherjee and Manvi Pant
(Reuters) -India’s UltraTech Cement said on Monday it was seeing early signs of a price recovery, after it reported a sharp drop in second-quarter profit due to persistently low prices of the construction material.
“Prices have been improving since the end of August and so far in October, have held steady,” Atul Daga, UltraTech’s finance chief said in a post-earnings call.
Daga said the price of a cement bag was currently at 354 rupees ($4.21), up from 347 rupees at the end of August.
Cement prices hit a five-year low of 336 rupees per bag in the September quarter, Ambit Capital said, due to an industry-wide ramp up in production and thus supply, as companies sought to prepare to fill up medium-term demand expectations.
Additionally, demand for cement, which was already hit by an election-linked slowdown in construction in the first quarter, did not improve in the reported quarter, due to above-average monsoon rainfall.
Both of these weighed on the company’s financials.
India’s largest cement maker by capacity reported a 36% decline in net profit to 8.2 billion rupees for the quarter ended Sept. 30, far below the 10.53 billion rupees expected by analysts according to data compiled by LSEG.
It also reported its first quarterly decline in revenue since June 2020, when construction had come to a standstill due to the COVID-19 lockdown.
The company’s domestic sales volumes grew 3%, below the 6%-11% growth range reported in the last three quarters and at the lower-end of the 2%-8% range expected by analysts.
Daga said he expects volumes to grow in double digit percentage terms in the second half of the ongoing financial year.
“We are confident of no further demand slowdown,” he added.
($1 = 84.0520 Indian rupees)
(Reporting by Hritam Mukherjee and Manvi Pant in Bengaluru; Editing by Sumana Nandy, Sonia Cheema and Varun H K)
