UltraTech Cement Reports a Dip in Net Consolidated Profit for Q2 FY25
UltraTech Cement, the largest cement manufacturer in India, has recorded a dip of 35.55% in its net consolidated profit for the quarter ended September 30, 2024. The company’s profit after tax stood at Rs 8.25 billion, compared to Rs 12.80 billion in the corresponding quarter of the previous fiscal year. This decline in profit was attributed to various factors, including changes in total income and operating margins.
Net Consolidated Total Income and Financial Overview
UltraTech Cement’s net consolidated total income for Q2 FY25 witnessed a small dip of approximately 2%, amounting to Rs 158.55 billion compared to Rs 161.79 billion in the same quarter last year. Despite these earnings, the company’s financial statistics indicate a relatively stable position. As of September 30, 2024, UltraTech Cement’s net worth was valued at Rs 627.69 billion, with a debt-equity ratio of 0.25 and a total debt to total assets ratio of 15%. Additionally, the company had a current liability ratio of 45% with an operating margin of 13% and a net profit margin of 5%.
Acquisition Plans gain approval from The India Cements
In a significant development, UltraTech Cement’s board of directors approved a proposal for the acquisition of The India Cements. The proposal includes the acquisition of up to 10,13,91,231 equity shares, representing 32.72% of the equity share capital of The India Cements, at a price of Rs. 390 per equity share. This acquisition will amount to a total consideration of Rs 39.54 billion. Additionally, UltraTech Cement plans to make an open offer to the public shareholders of The India Cements, for up to 8,05,73,273 equity shares, constituting 26¾ of the equity share capital, at the same price of Rs 390 per equity share.
Growth and Expansion Prospects
UltraTech Cement has managed to achieve a capacity utilization rate of 68% during the past quarter. Furthermore, the company has observed a three percent year-on-year growth in domestic sales volume on a consolidated basis. Additionally, the company has made efforts to manage costs and improve efficiency. Energy costs have decreased by 14% compared to the previous year, while raw material costs have risen slightly by 1% due to an increase in the cost of fly ash and slag.
Looking ahead, UltraTech Cement has exciting expansion projects in the pipeline. With the completion of these ongoing projects across India by FY27 and the receipt of statutory approvals for the acquisitions of Kesoram Cement (10.75 MTPA) and The India Cements (14.45 MTPA), UltraTech Cement’s total cement capacity will exceed 200 MTPA. These expansion plans highlight the company’s confidence in its future growth and its commitment to maintaining its position as a leader in the Indian cement industry.
In conclusion, UltraTech Cement has experienced a dip in its net consolidated profit in Q2 FY25 but has demonstrated resilience with its stable financial position. The approval of the acquisition plans for The India Cements adds to the company’s growth strategy and facilitates its expansion into new markets. With the completion of the ongoing expansion projects and the upcoming acquisitions, UltraTech Cement is well-positioned to further strengthen its market share and emerge as a key player in the cement industry.
