Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rural demand grew by 9% in Q1 FY25, indicating strong market potential.
- UltraTech Cement Ltd (BOM:532538, Financial) achieved a capacity utilization of 85%, showcasing efficient use of resources.
- The company is making significant strides in sustainability, with 6.5% of fuel consumption coming from alternate fuels.
- UltraTech Cement Ltd (BOM:532538) has successfully consolidated its position in the UAE market with a 54% stake in RAK White Cement.
- The company is on track with its expansion plans, adding 16 million tonnes of capacity this year, representing 40% of new capacity in the country.
Negative Points
- Infra demand was slow in Q1 FY25, which could impact future growth if not improved.
- Prices have been soft, with a 2.4% decline in Q1 and further softness expected in July.
- The company faced higher other expenses due to one-time marketing spends, impacting profitability.
- East region showed the lowest capacity utilization at 80%, indicating regional disparities in demand.
- The company’s clinker utilization is around 85-86%, which may indicate limited room for further efficiency improvements in the short term.
Q & A Highlights
Q: Could you quantify the one-off marketing spend and what should be the recurring cost?
A: The recurring cost will normalize to around INR 675 per ton, down from INR 755 per ton this quarter. (Atul Daga, CFO)
Q: Can you break down your capacity utilization by region?
A: South and West are at 85%-86%, East is the slowest at 80%, and North and Central are between 82%-85%. (Atul Daga, CFO)
Q: What is the outlook on cement prices and realizations?
A: Prices have been softer, with a 2.4% decline this quarter. July prices are further down by 1.5%. We expect price improvements only in the second half of the year. (Atul Daga, CFO)
Q: What is the status of the 6 million ton greenfield projects in Andhra Pradesh?
A: The projects are on track, with land already acquired and equipment ordered. (Atul Daga, CFO)
Q: What is the motivation behind the non-controlling financial investment in India Cement?
A: It is a pure financial investment, and we see it as a good opportunity. (Atul Daga, CFO)
Q: What are your expectations for fuel costs and pet coke mix?
A: Fuel costs are expected to decrease further. We aim to increase our pet coke mix from 37% to over 45% for the full year. (Atul Daga, CFO)
Q: What is the volume growth guidance for this year?
A: We expect industry growth of around 7%-8%, and UltraTech aims for double-digit growth. (Atul Daga, CFO)
Q: What are the current clinker utilization rates and cement-to-clinker conversion ratio?
A: Clinker utilization is around 85%-86%, and the cement-to-clinker conversion ratio is 1.46. (Atul Daga, CFO)
Q: What is the target for reducing logistics costs and lead distance?
A: We initially targeted a 25-kilometer reduction in lead distance and achieved 15 kilometers in Q1. We expect further reductions as our plant network expands. (Atul Daga, CFO)
Q: What is the status of the Kesoram Cement transaction?
A: We have received CCI approvals, and the final scheme for amalgamation will be filed with NCLT Kolkata and Mumbai. The effective date for the merger is set as April 1, 2024. (Atul Daga, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
