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Ambuja Cements Reports Q2 FY25 Results: Volume Growth Amid 42.5% Declining Profit

Ambuja Cements Q2 Results

October 28, 2024

New Delhi, India

Ambuja Cements Q2 Results

Adani Group’s Ambuja Cements delivered a steady performance in the July-September quarter of fiscal year 2024-25, showcasing a notable volume growth of 9%, amounting to 14.2 million tonnes. This marked the highest volume achieved for the Q2 series in the last five years. However, the company faced significant challenges reflected in its net profit.

Key Financial Highlights

Net Profit and Revenue

  • Net Profit: Ambuja Cements reported a net profit of ₹455.96 crore for Q2 FY25, which represents a sharp 42.5% decline from ₹792.96 crore in the corresponding quarter last year. The sequential drop in profit was 28.7%.
  • Revenue: The company’s revenue for the quarter reached ₹7,516 crore, showing a modest increase of 1.2% compared to the previous year. This revenue performance was attributed to strong volume growth and enhanced operational efficiency.

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Operational Performance

Volume and Production

  • The company achieved a significant volume growth of 9%, reaching 14.2 million tonnes. This volume is the highest recorded for Q2 in five years and is indicative of the strong demand in the construction sector.
  • EBITDA Performance: Ambuja’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at ₹1,111 crore, down 15% year-on-year, with an EBITDA margin of 14.8%.

Cost Management and Market Dynamics

  • Operating Costs: Operating costs decreased by 4% year-on-year to ₹4,497 per metric tonne, benefiting from a 13% reduction in kiln fuel costs due to increased usage of low-cost imported petcoke and e-auction coal.
  • Market Challenges: The cement industry faced headwinds such as weak cement prices, adverse weather conditions, and a shortage of labor and raw materials, contributing to the subdued demand growth during the quarter.

Strategic Insights

Ajay Kapur, Whole Time Director and CEO of Ambuja Cements, stated, “We are glad to deliver another sustained performance aligned to our growth blueprint and setting new benchmarks in efficiency.” He highlighted the company’s focus on innovation, digitalization, and environmental sustainability as key components of their strategy moving forward.

Future Outlook

The company aims to enhance its cement capacity to 100 million tonnes per annum by the end of the fiscal year, following its recent acquisition of Orient Cement. Ambuja Cements expects demand to grow by 4-5% in 2024-25, fueled by strong infrastructure demand and government initiatives such as PMAY Urban Housing 2.0.

Stock Market Reaction

Following the results announcement, Ambuja Cements’ share price rose by 3%, trading at ₹569.55 on the NSE, reflecting investor confidence despite the decline in net profit.

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