India's Adani-owned Ambuja Cements misses Q2 revenue view on weak sales volumes (updated)

Sanghi Industries

01/11/2023 14:29

(Adds analyst comment in paragraph 5)
    By Hritam Mukherjee
       BENGALURU, Nov 1 (Reuters) - India's Ambuja Cements
 ABUJ.NS  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  ACC.NS ," 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  SNGI.NS  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  ULTC.NS  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)
 ((Hritam.Mukherjee@thomsonreuters.com; X: @MukherjeeHritam;))