Concrete

Concrete times

Published

8 years ago

January 11, 2019

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ICR reviews the quarterly results of a few cement manufacturers.

Shree Cement performed exceedingly well beyond expectations. No other cement company will be able to match the number produced by Shree Cement. It has once again proven its ability to deliver operating results irrespective of market dynamics with its change in strategy.

In the view of analysts, the earnings of Shree Cement not merely depends on the market price but are connected with many other contributors of cost and volume. Supply chain is a significant contributor in the cost management. It is observed, Shree Cement has significant opportunities with advent of Internet of Things (IoT) and Artificial Intelligence (AI) in supply chain management. It is able to show the peers on what lies ahead of them. Shree Cement can fundamentally and structurally gap-up its EBITDA trend v/s peers, sustainably. Shree Cement has been able to show the opportunity that exists in managing supply chain despite unhealthy market conditions says Vaibhav Agarwal, Research Analyst at PhillipCapital.

Vaibhav feels with this new focus of Shree Cement, it is the only manufacturer in the sector having a potential to touch EBITDA mark of Rs 1,800 to 2,000 per tonne in the longer term, when the industry is still struggling to be at Rs 1,000 to 1,500 per tonne. In short, the numbers produced by Shree Cement were much above the market exceptions. There may be much more surprises from Shree Cement yet to come. Vaibhav strongly recommends the investors to buy Shree Cement scrip, driven by Shree Cement’s consistent ability to remain sustainable on operating performance, irrespective of market conditions and peer performances. Vaibhav further adds that Shree Cement’s full potential with these new initiatives is yet to unfold. Shree Cement is the only manufacturer in his view which can significantly and structurally redefine its earnings.

Century proves to be a drag
The numbers produced by UltraTech are after adjusting the merger of Century Textiles Cement division assets. EBIDTA was a shed better. Volumes are in line with the market expectations but EBIDTA was lower. However, the Century assets are yet to contribute anything to the numbers – at operating and overall performance. On the other hand, the contribution to Q2 numbers from Century has been negative as reported by Agarwal.

Vaibhav further adds that here is a big structural opportunity for UltraTech. UltraTech, being industry’s undisputed leader in supply chain management, we believe it will be able to turnaround Century’s performance faster than anticipated driven by it’s on the ground efforts on this front. More importantly such turnaround steps will not just be a game changer for UltraTech but in our view, for the industry as it will fundamentally change business methodologies especially in East and Central India in the long run.

Having said that, the next couple of quarters may be a minor drag for UltraTech, especially with Century merger as the process of transition and bringing supply chain efficiencies in acquired assets will be a tough task and UltraTech will need to time to deliver these results. However, once requisite protocols in supply chain are in place and being followed, the changes will be structural and also remain sustainable, in our view.

Vaibhav firmly believes the most important parameter to define earnings profile of any cement manufacturer is supply-chain which is beyond volumes, prices and costs. As one delivers on better supply-chain management, the result is either better prices or lower costs.

Few takeaways: About 14.6 million tonne capacity of Century assets now added to the numbers of UltraTech. Brand transition for all plants except Chhattisgarh unit is to be completed by December 2019. Chhattisgarh unit will continue under the umbrella brand "Birla Gold" for another year or so and later on to be rechristened to UltraTech brands. New brownfield and greenfield projects are coming up in East India. Vaibhav is more optimistic on unfolding the incremental potential rather than demand revival in the present situation.

ACC: EBIDTA margins are better
Based on the analysis carried out by Vivek Maheshwari of CLSA, we appreciate that the overall cement demand declined all across India in the last quarter. The macroeconomic condition is taking a toll on institutional market. The sluggish trend in the infrastructure sector adds to the woes of industry. Pricing volatility and a sharp inventory build-up has impacted the overall realisation. The volume of cement declined marginally by 2 per cent year on year basis but the volume of premium products grew by 8 per cent YOY basis. ACC is yet to take a call on choosing the corporate tax rate and hence there has been no change in the rate this quarter.

Talking about Q3 results, which are much better than the expectations of the analysts in general, the operating EBIDTA grew by 26 per cent YOY basis. The other income was higher than expected. Net earnings rose 46 per cent YOY basis. Blended unit cement realisations declined 5 per cent QoQ to Rs 269 per bag, which was slightly lower. Management is positive in its demand outlook, led by infra and affordable housing. For the current session ACC?s EBIDTA is up 20 percent while net earnings are up 40 per cent YoY.

Vivek raises EPS estimates 3-4 per cent as and lowers cost assumptions. He recommends a BUY rating with an Rs 2,050 target price. A pickup in demand as well as cement pricing is key drivers of the stock price, in his view.

Key highlights about costs: a) Sourcing of Material has been optimised through better supply chain efficiency. b) Reduction in packing cost due to lowering of cost on account of PP granule price.

Concrete

Cement Makers’ Margins To Fall Rs 50-75 Per Tonne Amid West Asia Conflict

Crisil Sees Margins Easing Despite Steady Demand

Published

2 weeks ago

July 29, 2026

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Crisil said operating margins of Indian cement manufacturers are expected to decline by Rs 50-75 per tonne (t) this fiscal to Rs 925-950 per t due to higher input costs triggered by the West Asia conflict. The analysis covered 18 cement companies accounting for nearly 90 per cent of India’s domestic cement capacity and noted margins had improved sharply to around Rs 1,000 per t in fiscal 2026.

Crisil noted that the reduction would be driven mainly by higher power and fuel costs, which account for about 30 per cent of total costs, as petcoke and imported coal prices have surged amid geopolitical uncertainties. Freight costs, which account for about a quarter of total costs, are also expected to remain elevated because of higher diesel prices. The impact on profitability is likely to be more pronounced in the first half of the fiscal year before easing commodity prices moderate cost pressures later.

The rating agency said steady domestic demand and strong balance sheets should keep credit profiles stable despite the moderation in margins. Green energy currently accounts for 35-40 per cent of the sector’s total electricity consumption and is expected to partly cushion higher energy costs. Operating cash flows are likely to remain resilient, supported by projected 6-7 per cent growth in cement demand this fiscal.

Crisil highlighted that demand growth will be driven primarily by infrastructure spending, which meets about one-third of sector consumption, and by a nearly 18 per cent higher budgetary allocation for core ministries that should support project execution. Weaker rural housing demand amid pressure on agricultural incomes from a possible below-average monsoon may be offset by improved urban housing demand supported by favourable home-loan rates and a strong pipeline of Pradhan Mantri Awas Yojana-Urban projects. Ongoing capacity additions will keep capital expenditure elevated and may lift net debt to EBITDA to between 1.2 and 1.4 times from around 1.0 time last fiscal, though ratios are expected to remain healthy.

Concrete

UltraTech Board Approves Rs 50 bn Fundraise Via NCDs

Company to issue half a million debentures for expansion plan

Published

2 weeks ago

July 28, 2026

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UltraTech Cement’s board of directors has approved raising Rs 5,000 crore (Rs 50 bn) through non?convertible debentures issued in rupees.

The finance committee cleared a proposal to issue up to 500,000 fully paid, unsecured, listed, rated, redeemable, rupee?denominated, non?convertible, non?cumulative debentures of Rs 1 lakh each (Rs 0.1 mn each), aggregating to the Rs 5,000 crore programme.

As of June 2026 the firm reported net debt of Rs 15,875 crore (Rs 158.75 bn) and said its capacity expansion projects under execution are backed by capital expenditure of about Rs 17,000 crore (Rs 170 bn) over the next two to two?and?a?half years.

UltraTech spent Rs 9,500 crore (Rs 95 bn) on capital expenditure in financial year 2026 and in April the group crossed 200.1 mn tonnes per annum of domestic grey cement capacity and 205.5 mn tonnes per annum of global capacity.

The chief financial officer indicated the company would take consolidated capacity beyond 242 mn tonnes per annum, with grey cement capacity reaching 212.7 mn tonnes per annum by the end of financial year 2027. He noted the net debt?to?earnings before interest, taxes, depreciation and amortisation ratio stood at 0.87 times as of June 2026 and the company was confident of ending financial year 2027 with the ratio below one time.

In the first quarter of financial year 2026?27 UltraTech’s net profit attributable to owners rose 16.8 per cent year?on?year to Rs 2,599.3 crore (Rs 25.993 bn) and revenue from operations increased 15.9 per cent to Rs 24,648.20 crore (Rs 246.482 bn). The board approval is expected to complement internal cash flows as the company advances its expansion programme.

Concrete

Lokesh Lays Stone For Rs 31 Billion Cement Unit In Kadapa

Line-2 expansion to make Kadapa a major cement hub

Published

3 weeks ago

July 20, 2026

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Andhra Pradesh Education and IT Minister Nara Lokesh on Wednesday laid the foundation stone for the Line-2 expansion of Dalmia Bharat Cement at Chinnakomerla village in Mylavaram Mandal in Kadapa district. The project carries an investment of Rs 31 billion (bn) and is slated for completion by the third quarter of the financial year 2028. The expansion is intended to boost industrial growth and employment generation across the Rayalaseema region.

Once commissioned, the Kadapa facility will become Dalmia Bharat’s largest integrated cement manufacturing ecosystem in southern India, creating over 1,000 direct and indirect jobs and opening new business avenues for regional micro, small and medium enterprises and transport operators. Lokesh said the expansion signalled growing corporate confidence in the state and reflected the practical ease of doing business that secured repeat investment.

He placed the project within the government’s wider economic targets and recalled the Yuvagalam padayatra commitment to generate two million (mn) jobs within five years, noting that the state would cultivate talent while industry created opportunities. Lokesh highlighted Andhra Pradesh’s competitive pursuit of major manufacturing accounts, mentioning past successes and a personal initiative to engage global investors when persuading them to anchor expansion in the state.

The plant will leverage Kadapa’s abundant limestone reserves to scale production and sustainability. Clinker capacity is planned to rise from two point five million tonnes per annum (mn tpa) to six point one mn tpa, while overall cement output will increase from three point six mn tpa to nine point six mn tpa. The unit is designed to operate on over eighty per cent renewable energy and deploy waste heat recovery, zero liquid discharge, water recycling and advanced AI systems to optimise efficiency. Industries Minister TG Bharat, BC Welfare Minister S. Savitha and Jammalamadugu MLA C. Adinarayana Reddy attended the ceremony.