ACC, Ambuja, Shree Cement, UltraTech's share prices gain encouraged by Dalmia Bharat's better than expected Q2 results

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ACC Ltd, Ambuja Cements Ltd, UltraTech Cement Ltd, Shree Cement Ltd gained up to 1.7% in morning trades on Monday as better than expected operating performance and Q2 results by Dalmia Bharat Ltd lifted sentiments. Stock prices of Dalmia Bharat gained up to 3.5%. The impact of the decline in costs is now visible and may lift the overall Q2 results of Cement majors amidst strong demand and improved pricing scenario.

Dalmia Bharat’s per tonne profitability at ₹950 per tonne improved over ₹875 seen in the previous quarter and ₹653 in the year-ago quarter, as per analyst’s calculations, led by lower costs. Its reported net profit for the quarter at ₹123 crore grew 162% year-on-year. Analysts at HDFC Securities Ltd who maintain a positive view on the sector say that “We expect our coverage universe margin to recover by ₹200 and ₹50 per metric tonne year-on-year in FY24 and FY25 respectively to ₹1,015 and ₹1,060 per metric tonne respectively".

During the Q2 they expect unit Ebitda for companies in their coverage universe to rebound after eight consecutive quarters of decline as per HDFC Securities. Ebitda stands for Earnings before interest tax depreciation and amortization. Also Read- Dalmia Bharat's share price rises up to 3.5% post its Q2 results beat analysts expectations on lower costs They estimate their coverage universe of 15 companies to deliver strong 12% YoY volume growth (four-year CAGR: 9%) in Q2FY24.

Also they expect industry volume to grow by 10% year-on-year in FY24. Given the recent spike in fuel price led by rise in crude prices analysts estimate input cost reduction to bottom out in Q3FY24. Meanwhile the improvement in price bodes well for the profitability of manufacturers.