India: UltraTech Cement Limited reports growth in sales volume and EBIDTA y-o-y in Q2FY24

UltraTech Cement Limited reported a growth in sales volume and 'Earnings Before Interest, Taxes, Depreciation, and Amortisation' (EBITDA) in Q2FY'24 against the corresponding period in the last fiscal. The uptrend on an annual comparison continues for the sales volume and EBIDTA maintaining the momentum over the past few quarters. The company highlights good demand for cement in Q2 FY'24 backed by robust infrastructure and rural demand. However, on a quarterly note, the company's sales and EBIDTA have softened over the past couple of quarters.

During the quarter, the company spent INR2,545 crores on capital expenditure, with a large portion going towards the expansion programmes. The company is currently expanding its capacity by 22.6 million tonnes and is confident in meeting its timeline. They are also adding 3 more slag mills totaling 1.8 million tonnes, which will be commissioned along with the initial expansion. The second phase of growth will be 24.4 million tonnes. The company's target is to reach a capacity of 159.65 million tonnes by June 2025.

Sales volume grew y-o-y basis: The sales volume rose by 15% y-o-y to 25.66 mnt in Q2FY'24. However, it declined by 12% q-o-q from 29.01 mnt in Q1FY'24

The trade sales accounted for 67% of the total sales. Rural sales were at 63% of trade sales growing at 15% for the quarter. The Ready- mix concrete (RMC) volume grew by 31% y-o-y.

EBITDA increases y-o-y: The company's operating Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) was recorded at INR 2, 608 crores in Q2FY'24, up by 35% on y-o-y basis against INR 1926 crores in Q2FY23. However it fell by 19% q-o-q form INR 3,209 crores in Q1FY'24.

Selling price increased: The prices in India have increased by 7-8% compared to June, and 1-1.5% compared to the previous quarter. Each region is experiencing an increase in prices, with East and Maharashtra seeing the highest increase of 7-8%, followed by South, North, and Central. Currently, all the prices are holding steady.

Key cost indicators (Grey Cement): The energy costs constitute 35% of total costs followed by logistics cost which is 28% and raw material costs totaling to 14%.

a)Energy cost: The energy cost in Q2FY'24 was INR 1555/mt down by 10% y-o-y from INR 1731/mt in Q2FY'23. The cost of blended fuel consumption (CV: 7500) was at USD 162/t in Q2FY'24 down by 19% y-o-y compared to USD 200/t in Q2 FY'23. Pet coke consumption was at 39% in Q2FY'24 vs 40% in Q2FY'23.

Also, the costs were down 4% q-o-q from INR 1621/mnt in Q1FY'24. The cost of blended fuel consumption (CV: 7500) was down by 9% q-o-q from USD 178/t in Q1 FY'24. Pet coke consumption of 7 LMT @ 39% mix of total fuel.

b) Logistics costs: The logistics cost in Q2FY'24 was INR 1219/mt down by 2% y-o-y from INR 1239/mt in Q2FY23. Also, the costs were down by 4% q-o-q from INR 1264/mnt in Q1FY'24.

The costs were reduced on account of lead optimization and improved operating efficiency. Lead has been reduced to 403 km in Q2 FY'24 from 428 km in Q2 FY'23 and 410 km in Q1 FY'24. The secondary lead, which is from our warehouse or rail hedge to the customer is dropped to about 40 km which is supported by - at nearly 1,100 warehouses, 280 railway sidings as also 52% of our dispatches were directly to customers without having any stoppage in between.

c) Raw material cost: The raw material cost in Q2FY'24 was INR 634/mt up by 4% on y-o-y & q-o-q from INR 610/mt in Q2FY'23 andQ1FY'24.

The company achieved improvement in clinker conversion ratio to 1.44 vs 1.41 in Q2 FY'23. The costs of raw materials increased significantly pushing the overall costs upward.