Ambuja Cements Q1 results: Net profit rises 12% to Rs 554 crore; sales volume degrows 10%

Mumbai: Indian cement maker, Ambuja Cements reported a 12% rise in consolidated net profit of Rs 554.25 crores for the March quarter of the year 2020, with sales volume degrowing by 10% to 5.77 million tonnes.

"Volume de-grew by 10%, with net sales falling by 3%, however till February Ambuja had recorded a healthy volume growth, which was impacted in March 2020 due to the nationwide lockdown," said the company in a presentation.

The company follows January-December as it's fiscal year and the total expense during the January-March quarter was registered at Rs 5,388.38 crores, a decline of 12.4% from Rs 6,151 crores in the same quarter last year.

Operating earnings before interest, depreciation and tax increased by 30% at Rs 1,046 per tonne as against Rs 724 per tonne during the same quarter last year on account of higher realisations, growth in premium products and lower fuel costs, the company said.

"ACEM migrated to IndAS 116 from the quarter, which resulted in net Rs50mn increase in operating costs mainly due to Rs163mn forex loss resulting from translating of lease liability at closing exchange rate," said Reliance Securities, senior research analyst, Binod Modi.

The company's raw material cost increased 12% to Rs 438 per tonne due to increase in flyash cost (mainly in North).

Net sales were recorded at Rs 6,129 crores for the March quarter as against Rs 6,694 crores during the same quarter last year.

"Sustainability of this performance is doubtful given the recent track record of the company and current demand scenario" said Modi.

"We expect a delay in announced capacity additions and planning for new capacities as low demand should result in decade-low clinker utilization in FY22E (68% vs. 70% in FY14). It may also put the pricing power at risk if efforts are to gain market share," said Sanjeev Kumar Singh, research analyst, Emkay Global in a sector report.

The company's stocks gained 2.59% to trade at Rs 172.30 in BSE on Monday.