Shares of the cement major traded in the red on Friday, after it announced its quarterly results. But why were investors disappointed? Let's break it down. Let's begin with some positives. The company reported a 15% year-on-year (YoY) rise in its net sales to ₹4,393 crore in Q2 of 2022 (the company follows a Jan-Dec financial year). And this was not only because of price hikes. The company said cement sales volumes were 10.5% higher in the quarter YoY. Notably, ready-mix concrete volumes were 44% higher. But here's where the positives end. The company's net profit fell 60% YoY to ₹227 crore despite solid volume growth. The bottomline was impacted mainly by rising fuel costs, which shot up by 58% to ₹1,311 crore in the quarter. This brought the company's EBITDA margin down sharply to 9.7% from 22.8%! While investors were disappointed, the company is positive about demand in the coming months. It said that a normal monsoon is expected to be a positive for the rural economy. Besides this, it believes that construction activity in the housing, infrastructure and industrial spaces is expected to be robust. It is also optimistic about demand for warehousing space, led by a spurt in e-commerce and retail segments. Interestingly, a 13-14% growth is expected in the demand for office spaces in 2022 alone. In all, the future prospects look strong, but nothing’s ever concrete in these volatile times! |
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