India's Ambuja Cements on Tuesday reported a better-than-expected fourth-quarter profit, aided by increased government spending on infrastructure and lower raw material costs.
Cement makers have seen prices of key raw materials such as coal and petcoke drop in recent months, analysts say.
Ambuja's profit after tax for the quarter ended March 31 rose to 5.02 billion rupees ($61.3 million)from 4.94 billion rupees a year earlier. Analysts, on average, had expected the Adani Group-owned company to report a profit of 4.55 billion rupees.
The margins on earnings before interest, taxes, depreciation, and amortization expanded to 22.6% from 17.3% a year earlier after kiln fuel costs fell 10%.
"With the rise in construction activities across our markets, we see the continuation of the elevated demand and strong volumes in the coming quarters as well," Chief Executive Ajay Kapur said in a statement.
"We are encouraged by the government’s increased spending on infrastructure development," the company said.
Revenue from operations climbed 8.4% to 42.56 billion rupees, while the board recommended a final dividend of 2.50 rupees per share for the fiscal year that ended in March.
The increase in revenue comes even as it halted operations at its plants in northern India's Himachal Pradesh state for 50 days.
Late January, U.S.-based short-seller Hindenburg Research raised concerns about Ambuja's new owner Adani Group's debt levels and use of tax havens, allegations the group has denied. Ambuja's shares have fallen about 14% since then.
After buying Holcim AG's cement businesses in India - Ambuja and ACC Ltd - for $10.5 billion last year, the debt-laden group was reportedly looking to sell a 4-5% stake in Ambuja Cements to cut its debt. Ambuja said the company remains debt-free.
Last month, larger rival Ultratech Cement reported a 32% slump in March-quarter profit.
($1 = 81.8700 Indian rupees) (Reporting by Manvi Pant in Bengaluru; Editing by Dhanya Ann Thoppil)