By Hritam Mukherjee
BENGALURU (Reuters) -India’s Ambuja Cements on Wednesday missed quarterly revenue estimates after higher prices damped sales volumes.
Revenue from operations grew 8% to 39.7 billion rupees ($476.8 million) for the three months ended Sept. 30, but fell short of analysts’ estimate of 41.43 billion rupees, according to LSEG data.
Despite infrastructure and real estate demand, higher cement prices and a delayed pickup in monsoon rainfall during the quarter weakened volume growth, analysts had noted earlier.
Sales volumes rose to 7.6 million tonnes (MT) from 7.1 MT a year earlier, but declined sequentially. Centrum Institutional Research had expected sales volumes to rise to 8.1 MT.
“The company disappointed on two counts in the second quarter – lower volume growth and the core profit per ton difference between the company and ACC,” Satyadeep Jain, research analyst at Ambit Capital said, adding that the cement producer has weathered some market share losses to larger peers during the quarter.
Profit after tax jumped nearly five times to 6.44 billion rupees, beating the analysts’ estimate on a near-32% slump in power and fuel costs that pulled the total expenses down.
Healthy growth and demand prospects are giving the company the space to build new capacities and “explore upon strategic initiatives to boost profitability,” the company said in a statement.
Ambuja had in August said it would buy a near 83% stake in smaller rival Sanghi Industries for $295 million, in a move to ramp up capacity when the sector is facing intense competition.
The acquisition is expected to close next quarter, it said on Wednesday.
Shares of Ambuja Cements closed 4.2% lower, taking the total losses to 21% this year.
Last month, larger rival UltraTech Cement topped second-quarter revenue estimates on strong domestic demand.
($1 = 83.2648 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Dhanya Ann Thoppil)
