Cement stocks rally as Ultratech Cement results beat estimates

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Mumbai | Published: April 26, 2019 3:31:49 AM

Ultratech Cement continued to rally for the second consecutive session, closing 5.14% higher at Rs 4,622.

Cement stocks, Ultratech Cement, Ultratech Cement profit, Bombay Stock Exchange, market newsSince the beginning of the year, Ultratech Cement has given 15.43% in returns while ACC has yielded 7.6% in returns. (Photo: Reuters)

Share prices of most cement companies gained on Thursday’s trade after Ultratech Cement reported healthy 4QFY19 earnings which was led by higher volumes and lower costs. Although ACC reported disappointing results but its shares managed to close the session 0.95% higher on the Bombay Stock Exchange (BSE) at Rs 1,622.10.

Ultratech Cement continued to rally for the second consecutive session, closing 5.14% higher at Rs 4,622. Since the beginning of the year, Ultratech Cement has given 15.43% in returns while ACC has yielded 7.6% in returns.

Grasim Industries, the owner of Ultratech Cement, hit a six-month high on Thursday and closed 4.6% higher at Rs 921.5. With Binani Cements becoming Ultratech Cement’s wholly-owned subsidiary, Binani assets are ramping up well even as intercompany transfers distorted standalone numbers in 4QFY19, said Kotak Institutional Equities in a report. “Demand moderation in FY2020E and continuous capacity addition should keep margin expansion in check,” KIE added in a report.

In contrast, ACC’s 1QCY19 EBITDA of Rs 460 crore was lower than KIE’s estimate. The miss was led by both weaker realisation and higher costs. Higher sales in East region impacted realisation while lower supply of linkage coal and increase in lead distance impacted costs. Ultratech Cement reported standalone revenues of Rs 10,500 crore, EBITDA of Rs 2,210 crore and net income of Rs 1,010 crore , against KIE’s estimate of Rs 9960 crore, Rs 1,930 crore and Rs 780 crore, respectively. ACC reported revenues of Rs 3,840 crore, EBITDA of Rs 460 crore and adjusted net-income of Rs 240 crore, against KIE’s estimate of Rs 3,970 crore, Rs 570 crore and Rs 350 crore, respectively.

Share prices of cement companies rallied anywhere between 2 to 6 % on Thursday. Interestingly, The Ramco Cements and Orient Cements has given 24.82% and 21.4% in returns since the beginning of the year. However, Ambuja Cement’s stock has failed to deliver positive returns in CY19.

Additionally, the company even closed the session 1.67% lower at Rs 220.65 on Thursday. “For Ambuja Cement Q4CY18 turned out to be a weak quarter with EBITDA coming 24% below estimate. The company off late has not taken any definitive steps for capacity expansion and to that extent the benefits to the company would be largely from cyclical price recovery in the near term,” said Edelweiss Securities in a report. Results of other cement companies are yet to be declared.

In April, results of Orient Cement and Ambuja Cement will be declared on April 29 and 30. While results of Shree Cement and Ramco Cements will be announced on May 18 and 22

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