BENGALURU (Reuters) – Indian cement manufacturer Dalmia Bharat reported a nearly 34% fall in first-quarter profit on Thursday as lack of growth in cement prices and rise in raw material prices outweighed volume growth.
The company’s consolidated net profit fell to 1.30 billion Indian rupees ($15.86 million) for the quarter ended June 30, from 1.96 billion rupees a year earlier, it said in an exchange filing.
Cement prices were weak as producers focused on volumes, said brokerage Jefferies.
HDFC Securities added that average cement prices pan-India fell around 1.5% sequentially in Q1, as manufacturers protected their market share amid growing competition.
Dalmia, India’s fourth-largest cement producer by market capitsalisation, said its revenue from operations rose about 10% year-on-year to 36.24 billion rupees.
Its sales volume too rose 12.4%. Last month, it said it was targeting a capacity of 110-130 million tonnes (MnT) by 2031. Its current installed capacity stands at 41.7 MnT per annum.
However, they were both outpaced by an almost 14% rise in expenses due to the higher cost of raw materials consumed. And while energy prices have been falling – Dalmia’s power and fuel costs fell 5.3% year-on-year – many brokerages had forecast limited benefits for cement firms due to high-cost fuel inventory.
Mahendra Singhi, managing director and CEO of Dalmia Bharat’s cement business unit said he expected “stable cement prices during the rest of the year”.
Brokerage Elara Capital also called out hot weather, increased agricultural activities in rural areas and sand availability concerns as other challenges for the industry during Q1.
Analysts added they see a positive impact on domestic cement companies in the coming quarters.
India’s top cement maker and Dalmia rival UltraTech Cement is set to report its Q1 results on Friday.
Dalmia’s shares closed 0.82% down ahead of the results. The stock rose around 10% in the June quarter compared to a 19% jump in the Nifty midcap 100 index.
($1 = 81.9620 Indian rupees)
(Reporting by Ashish Chandra in Bengaluru; Editing by Janane Venkatraman)