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ShareMumbai: Cement companies performed well in the September quarter, riding on higher sales volumes and better price realisations. Companies such as Grasim Industries, ACC and Shree Cement beat street expectations.
Grasim derived three-fourth of its consolidated revenues from the cement business, which increased 19.2% year on year to Rs 3,621.34 crore, helped by a 23% rise in sales volumes. Earnings before interest and tax (ebit) margins of the cement business improved 863 basis points (100 basis points make one percentage point) to 27.17%. The viscose staple fibre (VSF) business, which was adversely impacted due to slow demand for a while, surprised positively --- revenues from the business increased 13.6% and accounted for 19% of revenues.
ACC, the second-largest player in the space, posted a 9.5% increase in standalone revenues to Rs 2,005 crore, driven by better realisations and higher volumes (up 3.1%). Average price realisations increased 2.4%. Operating profit margins expanded by 855 basis points to 35.1% driven by a reduction in other expenditure (down 12.4%) and power costs. Power costs per tonne fell 20% on account of a sharp drop in imported coal prices. Strong operating performance led to a 53.7% increase in ACC's net profit to Rs 435.6 crore.
Shree Cement's cement business revenues increased 39%, riding on a 23% increase in sales volumes and a 12.9% increase in blended price realisations. The company's operating performance was spectacular with operating profit margins rising 1633 basis point to 45.4%, thanks to good growth in revenues and a 10.5% drop in costs per tonne due to lower petcoke prices. Net profit more than doubled (up 169%) to Rs 289 crore on the back of higher cement and power revenues, lower power and fuel costs, and a lower tax rate.
Ambuja Cements's performance was in line with analyst expectations. The third-largest player in the space posted a 17.2% increase in its revenues to Rs 1,643 crore, driven by a 4.8% increase in volumes, change in domestic and export sales, and better realisations. Domestic volume rose 9.1%, while export volume dropped 50%. Average realisations increased 12.6%. Net profit increased 27.3% to Rs 318.5 crore, led by strong operating performance.
