Ambuja Cement Q3FY25 profit surges 242%, revenue up, but EBITDA declines. Shares fell 2.5% initially, later recovered partially. Acquisition of Orient Cement is also underway.
Ambuja Cement, a major player in the Indian cement industry, recently announced its financial results for the quarter ended December 31, 2024 (Q3FY25), leading to significant movements in its share price. This article delves into the company’s performance, key financial metrics, and the subsequent market reaction.
Q3FY25 Financial Performance
Ambuja Cement reported a substantial increase in its standalone net profit, surging by 242% to ₹1,758 crore, compared to ₹514 crore in the same quarter of the previous year. This impressive growth is primarily attributed to a notable rise in other income, which jumped to ₹771.7 crore from ₹108.2 crore. Additionally, the company benefited from government grants of ₹193 crore, a significant increase from ₹17 crore in the prior year’s quarter.
The company’s revenue from operations also saw an increase, climbing by 10% to ₹4,850 crore from ₹4,422 crore in the corresponding quarter of the previous fiscal year. Another report mentioned the revenue at ₹5,043 crore, a 13.6% increase from ₹4,439 crore in the same period last year. This discrepancy may arise from different reporting standards or consolidation practices across the reports. The discrepancy between these two revenue numbers in the two reports are noted, but not explained in the provided corpus. The volume growth was 17% year-on-year for the October-to-December period which contributed to the stock recovering from the lows of the session.
Despite the strong revenue and net profit figures, Ambuja Cement’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) declined by 29% year-on-year to ₹600 crore. This decline resulted in a significant reduction in EBITDA margins, which narrowed to 11.9% from 19% in the year-ago quarter. The company’s standalone EBITDA per tonne also decreased, falling by 43% from the previous year to ₹595.
Cost Analysis
Ambuja Cement’s power and fuel costs remained relatively flat at ₹866 crore compared to the previous year. However, other expenses increased by 16% to ₹638 crore, contributing to the overall cost structure.
Market Reaction
Following the release of the financial results, Ambuja Cement’s share price experienced some volatility. Initially, the stock fell by as much as 2.5%. However, it later recovered partially and was trading 0.9% lower at ₹538.3. There was also a mention of the stock trading 1.5% lower at Rs 535 apiece. The stock has seen a 23% drop from its recent peak of ₹706.
Strategic Developments
Ambuja Cement’s board has approved an open offer to acquire up to 26% stake in Orient Cement from public shareholders at ₹395.4 per equity share. This move is part of a larger acquisition plan, including the purchase of 37.9% of Orient Cement’s existing share capital from the promoters and 8.9% from certain public shareholders.
The company’s expansion plans are also noteworthy. With the Sindri, Farakka, and Sankrail grinding units nearing completion, Ambuja Cement aims to reach an operational capacity of 104 MTPA by Q4FY25, 118 MTPA by FY26, and a target of 140 MTPA by FY28. Additionally, the company has added 631 million metric tonnes of new limestone reserves in Q3FY25, bringing the total reserves to 8,300 million metric tonnes. The high-quality limestone reserves of Orient Cement will further enhance the company’s resource base.
Sales Volume and Growth
Ambuja Cement has witnessed a 24% volume growth driven by higher trade sales volume and premium products. Despite lower realization, revenue growth of 14% has been achieved due to various sales initiatives. This includes technical services programs and engagement with influencers, focusing on premium products, branding, and promotional activity to enhance market presence.
Sources: https://www.moneycontrol.com/news/business/earnings/ambuja-cement-q3-net-profit-surges-242-to-rs-1-758-crore-12922625.html
https://www.cnbctv18.com/market/ambuja-cements-q3-results-profit-other-income-grants-margin-ebitda-per-tonne-volumes-share-price-reaction-19548311.htm
https://www.business-standard.com/companies/results/adani-group-ambuja-cements-q3fy25-results-profit-revenue-share-dividend-125012900638_1.html