UltraTech Cement delivered a disappointing quarter. Volume growth (9.6 mTPA, +0.8 percent YoY, -7.2 percent QoQ) remains constrained and blended realisations took a beating (Rs 4,697/t vs est Rs 4,751/t, -5.0 percent YoY, -2.1 percent QoQ) largely in line with expectations for the monsoon quarter. Marginal upticks in power and fuel, raw material and overheads contributed to a large negative surprise in costs, deflating EBITDA/t to an 8 quarter low. Shares of UltraTech slumped as much as 4.76 per cent on October 21 after the country´s largest cement maker posted a 52 per cent fall in net profit for the July-September quarter. UltraTech Cement reported on October 19 a net profit of Rs 2.6 billion for the quarter ended September 30, falling short of market estimates of Rs 4.1 billion (EBITDA/t at Rs 688/t vs. est. Rs 848/t). Hiked input and energy costs have been putting pressure on margins of Indian cement companies, while demand remains a concern, in an economy that is growing at its slowest pace in a decade.
Cement prices will likely increase once festive season gets over and labour availability improves. However, profitability remains at the risk of constrained volume growth in rest of FY14.