(Reuters) – India’s Ambuja Cements beat estimates for second-quarter profit on Monday, as higher-than-expected volume growth helped mitigate a decline in cement prices.
The company said its profit after tax fell 22% year-on-year to 5.01 billion rupees ($59.6 million), but came in above analysts’ average estimate of 3.57 billion rupees, as per data compiled by LSEG.
Revenue from operations for Ambuja, which is majority owned by billionaire Gautam Adani’s ports-to-power eponymous conglomerate, rose 6.1% to 42.13 billion rupees.
Sales volumes for the reported quarter climbed nearly 10%, higher than the 4.4%-8% range forecast by three analysts.
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KEY CONTEXT
Cement prices hit a five-year low of 336 rupees per bag in the September quarter, according to Ambit Capital, due to an industry-wide ramp-up in production to meet medium-term demand expectations, leading to greater supply.
Ambuja, like its Adani-owned peer ACC, still benefited from steady volume sales, further supported by lower prices, in a quarter usually considered weak as monsoons trigger a slowdown in cement demand.
Market leader UltraTech Cement posted its first quarterly revenue drop in four years, but also flagged early signs of price recovery.
Ambuja last week announced its second acquisition of the year, which was the latest of the string of industry-wide deals that has intensified competition.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBIT Revenue Profit Mean # of Stock to Div
DA growth growth rating* analyst price yield
(%) (%) s target** (%)
Ambuja Cements 29.48 15.30 15.43 25.82 Buy 27 0.82 0.36
ACC 18.95 10.46 6.81 10.35 Buy 18 0.82 0.34
UltraTech Cement 36.61 20.60 10.65 20.76 Buy 35 0.93 0.64
Shree Cement 39.17 17.23 7.82 7.11 Hold 16 0.93 0.42
* 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
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 84.0480 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips)
