India's Ambuja Cements misses Q4 profit estimate on lower prices

FILE PHOTO: A dealer selling Ambuja cement speaks on his phone at his shop in Ahmedabad

(Reuters) - Ambuja Cements, India's second-largest cement maker by market capitalisation, reported on Wednesday a smaller-than-expected profit rise in the fourth quarter as lower prices weighed.

WHY IT'S IMPORTANT

Cement makers are expected to report subdued income from sales in the reported quarter, owing to a nearly 5% decline sequentially in cement prices across India.

The March quarter usually sees cement makers report strong volumes as they push prices down to clear year-end inventory backlogs. Analysts also expect lower fuel costs and domestic coke prices to help offset weak cement prices.

UltraTech Cement, the largest Indian cement maker by market value, as well as Dalmia Bharat and ACC have reported better-than-expected profit so far in the fourth quarter. These companies saw strong sales volumes offset the weaker pricing in the quarter.

BY THE NUMBERS

The Adani Group-backed company said on Wednesday its profit after tax for the quarter ended March 31 rose to 5.32 billion rupees ($63.7 million), from 5.02 billion rupees a year ago. Analysts, on average, estimated the company to report a profit of 7.56 billion rupees, as per LSEG data.

Still, revenue from operations climbed 12.3% to 47.80 billion rupees, beating analysts' estimate of 47.72 billion rupees.

WHAT'S NEXT?

The company expects the outlook of the cement industry to remain positive, driven by pre-election spending, government emphasis on infrastructure development and sustained real estate activity.

Ambuja Cements says it will benefit from cost leadership, synergy with group businesses, aiding it to sustain market leadership in the industry.

($1 = 83.4905 Indian rupees)

(Reporting by Anisha Ajith and Ashna Teresa Britto in Bengaluru; Editing by Sherry Jacob-Phillips)