New Delhi: Cement manufacturer Dalmia Bharat Ltd on Wednesday reported a 22% year-on-year rise in its consolidated net profit for the fiscal third quarter (Q3) to ₹266 crore. This growth was attributed to easing commodity prices along with subdued fuel cost. Net profit was in line with estimates of analysts polled by Bloomberg
Consolidated revenue of ₹3,600 crore was up 7.3% on year, led by an 8.1% increase in sales volumes. Cement makers have seen demand surge as the government focuses on infrastructure development in the run-up to general elections.
Dalmia Bharat also received the final instalment of ₹120 crore from Hippostores Technology Pvt. Ltd., a promoter group company, on account of the sale of Hippo Stores, the country’s fourth largest cement maker said in a statement accompanying the results.
“While we believe that margins may improve further from here on, our focus for the next 12-15 months would remain on improving our capacity utilization and delivering industry-leading volume growth,” said Puneet Dalmia, managing director & CEO, Dalmia Bharat, in the statement.
Earnings before interest, tax, depreciation, and amortization (Ebitda) stood at ₹775 crore in December ended quarter, with Ebitda margin at 21.5%.
“We continue to remain one of the lowest-cost producers in the country. This, along with softening commodity prices, helped us to achieve 11.3% YoY growth in our Ebitda/Tonne to ₹1,138,” said Dharmender Tuteja, chief financial officer, Dalmia Bharat.
“…In line with our commitment to keep net debt at less than 2 times Ebitda, we closed this quarter with net debt to Ebitda at 0.16 times. Our net debt is now reduced to ₹431 crore,” Tuteja said.
However, analysts warn that post elections, there might be a dip in demand, mirroring trends seen in previous election cycles.
“…the risk of a sluggish off-take in FY25 post-elections remains similar to FY20 witnessing flat demand on the back of a 13% surge in FY19 in the run-up to the preceding general elections,” said Navin Sahadeo, analyst, ICICI Securities Ltd, in a report.
ICICI Securities is neutral on the industry, while HDFC Securities expects industry volumes to grow 10% year-on-year in FY24 on the back of recent price recovery and fuel cost cool-off. HDFC maintains a “buy” rating on the Dalmia Bharat stock.
Crisil has forecast significant capacity expansion in the Indian cement industry, anticipating an increase of 150-160 million tonnes per annum (MTPA) over the next five years, catering to the expected surge in demand from infrastructure and housing sectors.
“As much as 70-75 MT (million tonnes) of the capacity addition is expected to be commissioned next fiscal, with 50-55% concentrated in the eastern and central regions. Large players will account for 50-55% of the planned capacity addition,” it had said in a statement.
The industry currently has a combined capacity of 595 MTPA with 119 MTPA of that coming up in the last five fiscal years. Dalmia Bharat said it completed debottlenecking at Belgaum, Karnataka, increasing its total cement capacity to 44.6 MT.
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