Shares of UltraTech Cement Ltd fell more than 1% on May 2, the first session since the company reported a 32.29% drop in consolidated net profit for the March quarter on Friday.

The stock was trading at Rs 7,466.40 on the BSE at 10:05 am on Tuesday, down 1.17% from its previous close.

The company posted a consolidated net profit of Rs 1,665.95 crore for the quarter, compared to a net profit of Rs 2,460.51 crore reported a year ago. The decrease was primarily due to tax expenses in the quarter being significantly higher than tax credits received in the same period last year.

 Nevertheless, the company’s operating income rose by 18.36% to Rs 18,662.38 crore, up from Rs 15,767.28 crore in the year-ago quarter.

The company’s energy costs rose 17% year-over-year, while costs fell 4% compared to the previous quarter. Petroleum coke and coal prices rose 18% YoY. In addition, the cost of raw materials increased by 9% year-on-year, mainly due to the increase in the cost of fly ash, slag, gypsum and other materials. UltraTech Cement delivered a strong 14% year-over-year or 23% quarter-on-quarter volume growth in Q4FY23.

Cement demand remains stable in April 2023 after a solid Q4FY23. UltraTech aims to outperform industry growth by 4-5 percentage points in the upcoming FY24. Cement prices will remain stable in April 2023, the company said.

UltraTech Cement commissioned 5.6 million tonnes per annum (mtpa) of capacity in Q4FY23 and is expected to add around 2.1 mtpa of additional capacity in Q1FY24. This will bring the company’s total production capacity to 131 metric tons/year. The second phase of the expansion, including the addition of 22.6 tons/year, is well underway and is expected to be completed by June 2025, bringing the total capacity to 154 tons/year. The company aims to double its ready-mix concrete (RMC) plants from 231. The company operates seven bulk cement terminals, with two more terminals expected to come onstream with the second expansion phase.

Despite investing Rs 60-70 billion in annual capex, UltraTech expects to have net cash on its balance sheet, giving it ample room to seek expansion while reducing operating costs.

Meanwhile, brokerage CLSA has downgraded UltraTech Cement to underperform from outperform and kept its price target at Rs 7,900 per share at the current market price.