India's Ramco Cements beats Q2 profit view as demand outpaces higher costs

Ramco Cements

09/11/2023 09:47

By Hritam Mukherjee
       BENGALURU, Nov 9 (Reuters) - India's Ramco Cements
 TRCE.NS  on Thursday soared past second-quarter profit
estimates as strong housing sales and resilient infrastructure
spending outpaced higher expenses.
    Net profit after tax grew nearly nine times to 1.01 billion
rupees ($12.1 million) for the quarter ended Sept. 30, and was
well above analysts' expectations of 794 million rupees, as per
LSEG data.
    Strong real estate sales, buoyant government spending ahead
of elections this year and next, and the weakest monsoon since
2018 have helped Indian cement players post higher earnings in
the current quarter.
    Ramco's results were in line with rivals ACC  ACC.NS  and
Shree Cement  SHCM.NS , which beat profit expectations, and
market leader in terms of market capitalisation UltraTech Cement
 ULTC.NS , which topped revenue expectations.
    Its revenue from operations jumped about 31% to 23.29
billion rupees. This outpaced expenses, which rose 24% to 22.05
billion rupees on the back of higher input and transportation
costs.
    Sales volumes grew 38%, supported by pressurized prices in
southern India, from where Ramco derived 81% of its total
volumes in the reported quarter.
        "A 82% capacity utilisation in a monsoon quarter may
bring in higher base next year. A key question now is their
capacity acceleration plans, which if not adequate may fail to
sustain such growth," said Satyadeep Jain, research analyst at
Ambit Capital.
  
    The company also forecast higher operating margins in the
coming quarters, citing cement price improvement from October
2023 and fuel prices.
    Ramco's core profit margins expanded to 18% from 11% a year
ago.
    Shares of Ramco Cements rose 3% after the results.
  
($1 = 83.2550 Indian rupees)

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Varun H
K)
 ((Hritam.Mukherjee@thomsonreuters.com; X: @MukherjeeHritam;))