UltraTech Cement Ltd, Largest manufacturer of grey cement and ready-mix concrete (RMC) and one of the largest manufacturers of white cement in India, in its Q4 earnings call discussed that the company is investing INR1,800 crore to enter the cables and wires industry, targeting a 60-40 wire-to-cable mix with 5-7x asset turnover and 20-25% ROC when mature. Management also addressed that it has evaluated and rejected entering adjacent categories for at least five years, focusing instead on maximizing their existing connections with homebuilders, contractors, and EPC companies. UltraTech aims to maintain industry-standard margins and minimalistic working capital despite significant industry capacity expansion.
UltraTech Cement reported a solid Q4 FY25 with a 10% year-over-year increase in consolidated net profit, slightly missing analyst expectations, and revenue growth of 13-14%, driven by a 9-17% rise in sales volumes to 135.83 million metric tonnes, despite a 2% year-over-year drop in cement prices. EBITDA rose 12.3% to INR4,618.4 crore, bolstered by a 16% reduction in fuel costs and a 10% decrease in power expenses, though margins dipped to 20% due to a 1% increase in raw material costs from higher fly ash and slag prices. The company commissioned 17.4 mtpa capacity, increasing domestic grey cement capacity by 30.3% to 183.36 mtpa, and added 269 MW of renewable energy, reaching 1.363 GW, including 342 MW from Waste Heat Recovery Systems. UltraTech advanced its acquisition strategy, completing Kesoram Cement (10.75 mtpa) on March 1, 2025, nearing finalization of India Cements (14.45 mtpa) with EBITDA breakeven and 28% QoQ volume growth, and engaging in talks for HeidelbergCement India, targeting 210.5 mtpa by FY27 with INR10,000 crore capex planned for FY26.
Continue Reading: Unearth the Vital Insights from UltraTech Cement Ltd’s Earnings Call!
Financial/Operational Metrics:
- Revenue: INR23,063 crores, up 6% YoY.
- Net Income: INR2,475 crores, up 10% YoY.
- EPS: INR84.23, up 8% YoY.
- Operating Income: INR4,608 crore, up 12% YoY.
Outlook:
- Growth Target: Open to both organic and inorganic plans.
Analyst Crossfire:
- Capital Allocation & Non-Cement Forays, Future Capex Plan (Ritesh Shah – Investec): Management assured no entry into additional non-cement categories for at least the next five years unless highly unlikely macro factors emerge. No additional capex beyond the planned ₹1,800 crore for wires and cables is being considered until the current project is fully ramped up (Atul Daga – Executive Director & CFO).
- Go-to-Market Strategy & Competitive Edge, Pricing Pressure in Wires & Cables (Indrajit Agarwal – CLSA): UltraTech plans to mirror industry-standard distribution, leveraging its powerful brand, 135,000 touchpoints, and 2,000+ technical service staff to build market presence. Despite industry-wide capex, management does not foresee pricing pressure due to the large (about INR1 lakh crore) and growing market size (Atul Daga – Executive Director & CFO).
- Technology Partnerships & Cost, Product Mix Strategy (Ashish Jain – Macquarie): Technology-related costs for the wires and cables venture are one-time and fully included in the ₹1,800 crore capex; third-party tech partners are being engaged. The expected product mix in the wires and cables business is 60% wires and 40% cables (Atul Daga – Executive Director & CFO).
- Capex Phasing, Working Capital & Branding Strategy (Rahul Gupta – Morgan Stanley, Amit Murarka – Axis Capital): The INR1,800 crore capex is expected to be broadly spread evenly over the coming years, tapering towards the end as is typical in project execution. Brand building will be expensed through P&L, and the wires and cables business aims for minimal or negative working capital like the cement segment (Atul Daga – Executive Director & CFO).
- Cement Capex Outlook & Product Scope in Cables (Amit Murarka – Axis Capital, Piyush Khandelwal – Motilal Oswal): Cement capital employed is already ₹80,000 crore and expected to reach ₹100,000 crore by FY27, with future expansion plans hinted but not formally announced yet. The company will focus on low-tension cables and wires, with no current plans to enter high-tension or EHV segments (Atul Daga – Executive Director & CFO).
- Wires vs. Cables Capex Phasing & Marketing Spend Strategy (Pratik Mahesh Farsi – HSBC, Raghav Malik – Jefferies): Facilities for wires and cables will be shared, so capex split is hard to isolate. Wires will hit the market first, with cables following. Promotional spends will be front-loaded in early years and then normalize in line with industry benchmarks (Atul Daga – Executive Director & CFO).
