India's Ramco Cements posts adjusted profit slump as low prices bite
Feb 6 (Reuters) - India's Ramco Cements (TRCE.NS), opens new tab on Thursday posted a 97% slump in third-quarter adjusted profit, hurt by a drop in prices of the key construction material.
Profit before exceptional items and tax for the company's cement business fell to 43.5 million rupees ($496,774) during the October-to-December period from 1.35 billion rupees a year earlier.
The company reported a one-time gain of 3.29 billion rupees from the sale of its surplus land and investments, it said, opens new tab.
Revenue from the cement business fell 6% on-year to 19.77 billion rupees, below analysts' average expectation of 20.19 billion rupees, according to data compiled by LSEG.
For further earnings highlights, click
KEY CONTEXT
Cement prices have been falling for most of last year, but showed signs of recovery in the reported quarter. Still, at the end of the December-quarter - a seasonally weak one as the pace of construction activity slackens - the average pan-India cement price was 11% lower on-year.
In south India, Ramco's key market, the price drop was even higher at 14%, it said, opens new tab, as increased dealmaking in the region spurred competition.
Cement makers have reported a mixed set of earnings for the December quarter.
Market leader UltraTech (ULTC.NS), opens new tab and its closest rivals, the Adani group-owned Ambuja (ABUJ.NS), opens new tab and ACC (ACC.NS), opens new tab, have benefitted as their acquisition sprees have helped bolster volumes.
However, smaller peers such as Shree Cement (SHCM.NS), opens new tab and Dalmia Bharat (DALB.NS), opens new tab have been hit by low prices.
PEER COMPARISON (WITH OTHER SOUTH REGION-FOCUSSED CEMENT MAKERS)
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER-DECEMBER STOCK PERFORMANCE
-- All data from LSEG
-- $1 = 87.5650 Indian rupees
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