UltraTech Cement is optimistic about capacity utilisation and broader demand expansion, except in the northern region. The management also expects declining fuel costs to boost profitability at India's biggest manufacturer of the primary building material as the nation enters an election year.
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View Details»In the post-earnings conference call, the UltraTech management said it expects capacity utilisation to improve close to 80-85% in the three months to March, from about 77% in the December 2023 quarter.
This growth is largely due to improvement in construction activities across the country, which has improved demand estimates for the next six months. Recently, Anurag Jain, secretary at the Ministry of Road Transport and Highways, said that the government plans to award 10,000 km of road projects by March 2024.
This means that the government plans to award more than 12,000 km of road projects in FY24. The industry's sales volumes are expected to grow in the range of 8-9% for FY24. The company's management expects that in the next six months, its fuel costs may come down by 7-8%. Due to cost efficiency, the company has managed its fuel costs well even in the December 2023 quarter. Its fuel consumption cost stood at $150 per tonne during the quarter as opposed to $162 per tonne in the September quarter.
In the quarter under review, the company's revenues expanded 8% to ₹16,740 crore when compared with ₹15,520 crore in the same quarter last year. Also, thanks to its cost efficiency and a slight improvement in cement prices in the December quarter, the company's operating profit (Ebitda) per tonne improved by 32% to ₹1,208 on a year-on-year basis.
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