Ambuja Cements, a part of the LafargeHolcim Group, reported an 18.5% growth in its first quarter net profit to ₹623 crore on better realisations even as volumes dropped following a slowdown in construction activities during the quarter.
The rise in profit came on a 3.6% increase in revenue to ₹6,925 crore as cement demand was muted during the quarter.
“Ambuja delivers a strong performance in the quarter backed by higher realisations and accelerated cost saving actions. Despite higher fuel costs, the company did well by optimising logistics costs, reducing raw material and fixed costs,” said Bimlendra Jha, MD and CEO, Ambuja Cements.
Commenting on the results, Bimlendra Jha, Managing Director and CEO, Ambuja Cements said,
Company’s EBITDA improved 14.7% to Rs 1484 crore on EBITDA margins of 21%, an improvement of 210 basis points.
“Cement demand growth was muted in the quarter. Focus on increasing premium product portfolio, targeting high contribution markets, improved customer service combined with logistics efficiencies resulted in achieving a strong performance,” he added.
“Re-election of a stable Central government is expected to provide policy continuum and growth momentum. Recent actions such as lower interest rates, reforms in IBC and slew of measures announced for the financial sector to ease the liquidity, augur well for the economy,” said the company in a statement, adding that the government’s current Budgetary allocation for infrastructure development — construction of concrete roads, interlinking of rivers, irrigation projects and affordable housing — is expected to have a favourable impact on cement demand.
Ambuja Cements shares on the BSE closed down marginally to ₹214.75 in a flat Mumbai market on Thursday, valuing the company at ₹42,614.73 crore.
“Ambuja Cements has reported a better-than-estimated performance on account of higher-than-expected average realisation. While sales volume fell short of expectations at 5.82 million tonnes, a sharper realisation recovery at ₹5,003 per tonne resulted in a 19% YoY growth in EBITDA at ₹6.32 billion, significantly higher than the expectation of ₹5.2 billion,” wrote Reliance Securities in a research note.