UltraTech Cement delivers a poor quarter

UltraTech Cement is engaged in the manufacturing and sale of Cement and Cement related product primarily in India.

Quarterly Earnings Results Walkthrough

UltraTech Cement Limited, the largest cement manufacturer in India, reported a 42 percent decline in its consolidated net profit at Rs 759 crore for the quarter ended September 30, 2022 from Rs 1,310 crore in the year-ago period. On a sequential basis, UltraTech’s profit was down 52 percent from Rs 1582 crore of the April-June period.

The consolidated revenue for the quarter at Rs 13893 crore was 16 percent higher from Rs 12017 crore in the year ago quarter. Sequentially, the revenue is 8 percent lower from Rs 15,164 crore.

The second quarter is traditionally weak for the cement sector, with lower demand as construction activity slows down due to monsoon. Demand was low during July and August but showed some signs of revival in September.

The pick-up in retail demand was through the suppressed demand accumulation during the monsoons, pre-Diwali construction and repair work gaining momentum, and pre-election tailwinds. Institutional demand was led by increased construction activity after the receding monsoons.

Operational performance

The main reason for the downfall in profits was lower realisation and higher energy costs that brought down the operational performance.

Energy costs, which comprise about 37 percent of operating costs for the company, increased 58 percent on year to Rs 1731 per tonne. The increase was due to a rise in blended fuel prices of $200 per tonne as compared to $120 per tonne during the same period last year.

The consumption of pet coke was at 40 percent during the quarter compared to 19 percent a year ago.

Raw material costs have risen by 18 percent, YoY to Rs 610 per tonne and constituted 13 percent of the total operating costs.

Due to the lowering of diesel prices by around a percent over the previous year and improved efficiency, the increase in logistics costs (27 percent of operating costs) was marginal 2 percent YoY.

Consolidated volume growth was at 23.1 million tonne for the quarter, up 7 percent YoY. Domestic sales volume grew by 10 percent on year with a capacity utilisation of 76 percent.


During the quarter, UltraTech commissioned 1.3 million tons per annum (mtpa) brownfield capacity at Dalla, Uttar Pradesh, taking the total capacity in India to 115.85 mtpa and 121.25 mtpa globally.

In the second half of this year and start of the next financial year, the company will commission another 15.4 mtpa of greenfield / brownfield expansion taking the total capacity to 131.25 mtpa in India.

Work on the second phase of growth of 22.6 mtpa announced during the first quarter has already commenced and the new capacity will come on stream in a phased manner by FY25.


Net Debt increased to Rs 8357 crore from Rs 5561 crore in the previous quarter ended June, 2022 primarily on account of increase in working capital and growth capex..

Technical Analysis

UltraTech Cement Weekly Candlestick Chart on Sharekhan’s TradeTiger

Let us take a look at the retracement levels. The stock has corrected to its 61.8% level and took strong support and bounced back up and faced resistance below Rs 7000. The stock has recently taken support on the 38.2% retracement level and is moving up.
The stock price is above the 100-day exponential moving average and MFI stands at 52 which indicates the stock is not overbought.

Considering the weak quarter, we may expect this stock to stagnate in the current price range.

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