Ambuja Cements Ltd, one of India’s leading cement manufacturers under the Adani Group umbrella, released its January-March quarter (Q4 FY24) results on Tuesday, April 29, reflecting a mixed performance driven by higher volumes, but weighed down by a steep fall in net profit.

Net Profit Drops 55% QoQ

One of the most striking numbers in Ambuja Cements' Q4 earnings was its net profit, which stood at ₹956.4 crore, marking a sharp 55% decline compared to ₹2,115.3 crore in the previous quarter (Q3 FY24). While this figure may seem concerning, it comes in the backdrop of acquisitions and consolidation, making year-on-year comparison less relevant.

It’s important to note that the company recently acquired stakes in Sanghi Industries and Penna Cements, which have led to significant changes in revenue and cost structures.

Revenue Grows by 6% QoQ, Misses Estimates

Despite the profit drop, Ambuja Cements posted a healthy 6% growth in revenue, reporting ₹9,889 crore for the March quarter. This was a jump from ₹8,415 crore in Q3 FY24. However, it fell slightly short of analyst estimates, with a CNBC-TV18 poll predicting revenue of ₹9,933 crore.

This slight miss may have contributed to the stock’s underwhelming performance on the results day.

EBITDA Shows Strong Growth, Beats Street Expectations

A positive takeaway from the earnings report was the company’s EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) which stood at ₹1,867 crore, representing a 9% increase from ₹1,711 crore in the previous quarter.

This beat market estimates, which had pegged the EBITDA around ₹1,600 crore. It also reflects strong operational efficiency, especially following the integration of acquired units and cost optimisation across verticals.

The EBITDA margin for the quarter stood at a respectable 18.9%, indicating that the company managed to protect its margins even as input costs and other variables fluctuated.

Record Sales Volumes Boost Performance

Perhaps the brightest spot in Ambuja Cements’ Q4 report was its consolidated cement sales volume, which hit a record 18.7 million tonnes (MT). This marks a 13% increase compared to the same quarter last year.

Standalone volumes were even more impressive, rising by over 22% to 11.6 MT, compared to 9.5 MT in the year-ago period.

This surge was largely due to acquired capacities from Sanghi and Penna Cements, alongside seasonal demand uptick during the March quarter.

According to analysts, the volume growth was in line with expectations, which had projected a growth range between 15% and 19%.

Impact of Acquisitions: Sanghi, Penna & ACC

Ambuja Cements’ performance must be viewed in the context of its recent acquisitions, including Sanghi Industries, Penna Cements, and its existing holding in ACC.

While ACC Ltd and Sanghi Industries had already reported their results, the consolidated impact of their performance is now visible in Ambuja’s overall financials. These acquisitions are expected to provide synergies in supply chain, distribution, and cost savings in the upcoming quarters.

The revenue and volume boost from these companies are already evident in the Q4 results.

Share Performance Post-Results

Despite reporting record volumes and better-than-expected EBITDA, Ambuja Cements shares were trading down 1.19% at ₹538 apiece at 2:45 PM on the day of the results announcement.

The stock has seen a decline of over 6% in the last six months, reflecting broader sectoral pressures and muted investor sentiment around the construction and infrastructure segment.

Investors may have reacted negatively to the steep drop in profit and the miss on revenue estimates, despite operational strength.

Market Reactions and Analyst Outlook

Market analysts have provided a cautiously optimistic outlook on Ambuja Cements, highlighting that while the net profit decline is a concern, the company’s strong operational performance, strategic acquisitions, and robust volume growth position it well for long-term growth.

Going forward, investor focus will remain on:

• Integration efficiencies from Penna and Sanghi

• Sustainability of margin levels

• Execution of Adani Group's cement expansion plans

• Raw material price trends, especially coal and pet coke

Conclusion: Mixed Quarter With Positive Underpinnings

Ambuja Cements has delivered a mixed bag in Q4 FY24, with profits under pressure, but volume and operational performance providing a cushion. The company is clearly focusing on scale and market share, with significant long-term gains expected from its recent acquisitions.

Key Takeaways:

• Net profit drops sharply by 55%, yet EBITDA and volume growth remain strong

• Sales volumes hit record levels, boosted by newly acquired capacities

• Revenue growth lags expectations, causing short-term stock price pressure

With the Indian construction and infrastructure sectors expected to grow steadily, Ambuja Cements remains a critical player to watch, especially under the evolving leadership and expansion plans of the Adani Group.

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