UltraTech Cement Ltd., India’s largest manufacturer of grey cement, ready-mix concrete and white cement, in its Q3 earnings call highlighted 10% organic volume growth, with strong performance in North and West regions. The company also addressed that its recent acquisitions of India Cements and Kesoram Cement will take about 12 months to improve, with full Waste Heat Recovery Systems (WHRS) benefits expected by Q4 FY26. The company mentioned that it plans significant capex of INR9,000 crores in FY26 and INR6,000-7,000 crores in FY27, funded through internal accruals. The company aims to outperform projected industry growth of 6-7% by targeting 10% plus growth, while working on gradual rebranding of India Cements products over 9-12 months.
UltraTech reported mixed Q3 results, with total revenue growing 3.3% beating estimates, while consolidated net profit declined 16.9%. The company showed strong operational growth with consolidated sales volume increasing 11% to 30.37 million tonnes and significant growth across segments. Energy costs decreased by 13% year-on-year, contributing to a 17% margin and EBITDA of INR2,888 crore, while capacity utilization reached 73%. The company made strategic moves by acquiring a 32.72% stake in India Cements Limited, and became the first Indian cement company to use National Waterways for raw material transport while expanding green energy usage to 33.4%. Looking ahead, UltraTech aims to exceed 200 mtpa cement capacity by FY27 through expansions and the pending Kesoram Cement acquisition. UltraTech is also in advanced talks to acquire a 69.39% stake in HeidelbergCement India, adding 14 mtpa capacity to its portfolio, furthering its inorganic growth strategy.
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Financial/Operational Metrics:
- Total Revenue: INR17,437 crore, up 3.3% YoY.
- Net Profit: INR1,473 crore, down 16.9% YoY.
- Basic EPS: INR50.99, down 17.3% YoY.
- Total Expense: INR15,604 crore, up 7.4% YoY.
Outlook:
- Demand Growth: Strong momentum from Q3, driven by Individual House Builders demand, infrastructure growth, and rural housing.
- Expansion Plans: Additional 10–15 million tonnes of capacity by 2026, aiming for 211–212 million tonnes.
Analyst Crossfire:
- Volume Growth & Regional Performance, South Region Strategy (Sumangal Nevatia – Kotak Securities): India Cements’ volume was excluded from growth numbers, which reflect UltraTech’s organic growth. North and West regions performed best, with East and South lagging. India Cements’ capacity utilization (57%) has potential for improvement, while Kesoram’s 70% utilization could rise by 4-5%. Brand transitions will be gradual (Atul Daga – CFO).
- Capex Allocation & Fuel Cost Trends (Amit Murarka – Axis Capital): Capex for UltraTech remains INR8,000-9,000 crore, with India Cements and Kesoram managing their respective capex needs. Higher-priced contracts ended in December; the fuel mix limits cost reductions, which remain dependent on market prices (Atul Daga – CFO).
- Future Volume Growth & Realization, Profitability Outlook (Rahul Gupta – Morgan Stanley, Pulkit Patni – Goldman Sachs): Capacity utilization for FY26 is expected at 80-85%, targeting double-digit growth on expanded capacity of 185 million tonnes. India Cements’ profitability turnaround could take at least 12 months, with rebranding starting gradually and EBITDA nearing UltraTech’s levels within this period (Atul Daga – CFO).
- Limestone Reserves in Tamil Nadu & Northeast Expansion Challenges (Jashandeep Chadha – Nomura, Navin Sahadeo – ICICI): India Cements’ reserves in Tamil Nadu ensure more than 25 years of operational longevity. Progress on Northeast plans has stalled due to difficulties in acquiring land and mines with clear titles (Atul Daga – CFO).
- Power Costs & Green Energy Share, Coastal Transport Mix (Patanjali Srinivasan – Sundaram, Satyadeep Jain – Ambit): Power costs remained relatively flat despite green energy share increasing from 24% to 33%. A one-time charge by the Andhra Pradesh government impacted December quarter costs. Coastal transport, currently at 3% of logistics, is expected to increase to 5% as rail connectivity improves in key markets (Atul Daga – CFO).
- Industry & UltraTech Growth, Capex Plans (Shravan Shah – Dolat Capital, Rajveer Tandon – Ventura Securities): Industry demand is expected to grow 6-7% in FY26, while UltraTech targets 10%+ growth, aided by clinker capacity additions. FY26 capex is set at INR8,000-9,000 crores, funded through internal accruals. Debt reduction will begin gradually post-capex cycle (Atul Daga – CFO).
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