The India Cements Limited — Q1 FY26 earnings call

Call held 21 Jul 2025

Management summary

The Q1 FY26 earnings call, primarily by UltraTech Cement Limited, provided an update on the integration and turnaround of India Cements. Management highlighted India Cements' improved operating performance, with a clear roadmap to significantly enhance profitability and achieve a net cash position by FY28. UltraTech reported robust consolidated volume growth and a positive outlook for South Indian markets, despite some headwinds from higher fuel costs and a slow urban housing segment. The company is actively pursuing capacity expansion and cost optimization initiatives across its portfolio.

Highlights

  • India Cements' operating EBITDA at INR400 per ton, with a clear path to exceed INR1,000 per ton by FY28 through efficiency improvements.

  • Significant increase in India Cements' renewable energy quotient targeted, from 3% to 86% by FY28, enhancing sustainability and reducing costs.

  • India Cements is on track to achieve a net cash balance sheet with debt under INR50 crores by the end of its capex program.

  • UltraTech's consolidated volume (including Kesoram) grew 9.7% YoY in Q1 FY26, indicating strong demand absorption.

  • South Indian markets are consolidating and benefiting from mega infrastructure projects, leading to improved demand and pricing.

Concerns

  • Fuel costs, particularly pet coke prices, were slightly higher this quarter, impacting overall fuel costs.

  • Urban housing demand was slow in the first half of the calendar year, though a rebound is anticipated.

  • Challenges in land acquisition and slow project awards for infrastructure projects were noted, potentially affecting demand pace.

Key financials

  1. UltraTech Consolidated Volume Growth 9.7%
  2. India Cements Volume 2.18 million tons
  3. India Cements Operating EBITDA/ton ₹400
  4. India Cements Limestone Royalty ₹160/metric ton
  5. UltraTech Realization Growth 0.022 sequential
  6. UltraTech Cost of Borrowing 7%
  7. UltraTech Consolidated Volume 34.64 million tons
  8. India Cements Marketing Expense Margin ₹200/ton
  9. India Cements Adjusted EBITDA/ton ₹458
  10. UltraTech Lead Distance 370 km
  11. UltraTech Lead Distance Reduction 14 km
  12. Intercompany Elimination ₹500 Cr

What they filed

Q1 FY27: revenue down 0.6%, net profit up 120.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,022 940 1,198 1,025 1,117 +9%1,114 +19%1,229 +3%1,019 −1%
EBITDA-163 -190 -2 83 81 +150%79 +142%153 +7750%156 +88%
Net profit-339 119 18 -133 9 +103%-3 −103%60 +233%27 +120%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹2,000 Cr this quarter · ₹10,000 Cr (FY26) planned India Cements capex funded with debt and internal accruals
    • India Cements efficiency and productivity improvement (WHRS, cooler upgrades, alternate fuel technologies)
    • India Cements renewable energy capacity (21 MW WHRS, 219 MW renewable energy)
    • UltraTech new capacity commissioning
    • UltraTech brownfield expansion
    In continuation to our letter dated 21st July 2025, please find enclosed the transcript of the Earnings Call held on 21st July 2025 on the unaudited financial results for the quarter ended 30th June 2025. ... The team has done a full assessment, as mentioned earlier, and we will be undertaking a capex plan for efficiency and productivity improvement going forward. ... Capex programs, the details of which we will definitely share in the next quarter, will be all funded with debt and internal accruals and we expect to reach debt level of under INR50 crores by the end of the program. (Page 1, 5) ... It has been around INR2,000 crores. Generally, that's been the run rate every quarter. (Page 7) ... We have close to INR10,000 crores this year. (Page 17)
  • Debt Debt disclosed Cost 7%
    • Rate reset UltraTech's average cost of borrowing at 7%, with potential for 1-2 more RBI rate cuts.
    • Refinance India Cements borrowings refinanced and getting rated AAA.
    My average cost of borrowing would be 7%. For the previous quarter was 7%. This 7% will come down with the rate cut, which have already been announced and further, if at all, anything happens. Pulkit, we have also been able to reprice, refinance India Cements borrowings also. They are also getting rated AAA with more or less the same kind of range, same rates. (Page 8) ... we expect to reach debt level of under INR50 crores by the end of the program. And thus, reaching almost a net cash on the balance sheet. (Page 5)
  • M&A India Cements Acquisition · Integrated

    Strategic acquisition to enhance market presence and achieve synergies in the South Indian market.

    India Cements' operating EBITDA at INR400/ton (after royalty), targeted to exceed INR1,000/ton by FY28. Brand transition by end of FY27.

    I want to talk about India Cements now, the company that we had acquired, concluded the transaction on 25th of December 2024. It's been 6 months or 2 quarters that we have been in charge of that company and the company is on a recovery path and growing and working as per the plan. (Page 5) ... we should be able to conclude the brand transition program before the end of fiscal '27 next year, we should be able to compete 100%. (Page 8)
  • M&A Kesoram Cement Acquisition · Integrated

    Integration into UltraTech's operations to leverage capacity and improve efficiency.

    Kesoram cement business consolidated with UltraTech from March 1st, 2025. Integration has blended smoothly with operations.

    Consolidated UltraTech Cement has grown at 9.7% Y-o-Y, including Kesoram in both the periods, though for all ends and purposes, Kesoram cement business got consolidated with us or we started managing the operations effectively from 1st March '25. (Page 4) ... We are rapidly integrating the operations of India Cements with UltraTech and are getting the advantage of brand UltraTech as we move along, and we are confident of reaching an EBITDA per metric ton in excess of INR1,000 by FY'28. Beyond that, we are nearly completing the integration of Kesoram assets which have blended in very smoothly with our operations and are on a course for capacity expansion in terms of capacity utilization and improving their efficiency further with WHRS installations. (Page 5)

Guidance & targets

Profitability

  • India Cements EBITDA/ton Profitability · by FY28 · High confidence >INR1,000 per ton
    We are rapidly integrating the operations of India Cements with UltraTech and are getting the advantage of brand UltraTech as we move along, and we are confident of reaching an EBITDA per metric ton in excess of INR1,000 by FY'28.

    — Atul Daga, Chief Financial Officer

Efficiency

  • India Cements Green Power Quotient Efficiency · by FY28 · High confidence 86%

    From 3% today

    We are increasing the renewable energy quotient with 21 megawatts of WHRS and 219 megawatts of renewable energy, thus taking the green power quotient for India Cements from 3% to 86% of their power requirement in FY'28, helping us reduce its carbon footprint.

    — Atul Daga, Chief Financial Officer

  • India Cements Cost of Production Parity with UltraTech Efficiency · by FY28 · High confidence Parity
    as we progress, fiscal '28, the costs also will get aligned, prices will also be aligned. We will have parity between the profitability of ICL plants or UltraTech existing cement plants in the southern markets.

    — Kailash Jhanwar, Managing Director

Debt

  • India Cements Debt Level Debt · by end of program · High confidence under INR50 crores (net cash)
    we expect to reach debt level of under INR50 crores by the end of the program. And thus, reaching almost a net cash on the balance sheet.

    — Atul Daga, Chief Financial Officer

Integration

  • India Cements Brand Transition Program Integration · before end of fiscal '27 · High confidence Concluded
    we should be able to conclude the brand transition program before the end of fiscal '27 next year, we should be able to compete 100%.

    — Atul Daga, Chief Financial Officer

Capacity

  • UltraTech Total Capacity Capacity · in 15-18 months · High confidence 212 million tons
    Just firstly, on the brownfield expansions, like so you will be reaching 212 million ton and I believe like that's going to happen in like 15 to 18 months of time.

    — Amit Murarka, Analyst (question) / Atul Daga, CFO (response)

Capex

  • UltraTech FY26 Capex Plan Capex · this year (FY26) · High confidence close to INR10,000 crores
    We have close to INR10,000 crores this year. We'll come back for the next year capex in due course.

    — Atul Daga, Chief Financial Officer

Costs

  • Power and Fuel Costs Costs · next quarter · Medium confidence declines
    No, no. I think we will see declines now.

    — Atul Daga, Chief Financial Officer

Market context

  • UltraTech Consolidated Volume Growth Volume · FY26 · High confidence double-digit
    We would target a double-digit growth given the fact that we have got new capacities into our fold. ... But on the base of FY '25, we'll do a double-digit growth, definitely.

    — Atul Daga, Chief Financial Officer

What to watch in Q2 FY26

UltraTech Next Phase of Organic Growth Announcement

Before end of calendar year or worst case, before end of FY26.
Current Blueprint getting stitched, will be presented to Board.
Target Announcement of next phase of organic growth.

Why it matters

This announcement will detail UltraTech's future capacity expansion plans and long-term growth strategy, impacting market share and competitive dynamics.

And before the end of this calendar or worst case, before the end of this financial year, we will come back with the next phase of organic growth.

Risks & concerns

  • Fuel Cost Volatility

    medium

    Global price volatilities led to slightly higher pet coke prices this quarter, impacting overall fuel costs.

    Management acknowledged

  • Demand Seasonality

    medium

    Q1 is typically a slower quarter for cement demand due to heat waves and monsoons, though rural markets are expected to grow favorably.

    Management acknowledged

  • Infrastructure Project Execution Challenges

    medium

    Challenges in land acquisitions, slow award of contracts, and execution issues for large infrastructure projects, though the government is actively addressing these.

    Management acknowledged

  • Urban Housing Slowdown

    low

    Urban housing was slow in the first half of the calendar year, but a rebound is anticipated based on registered land purchases and transactions.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
India Cements operating performance vs. INR1000/ton EBITDA guidance Direct
It could happen. Pricing, as such, nobody has a control. As of now, the prices are favorably poised in spite of heavy monsoons. The prices have not taken beating yet or they hold. I have seen prices improving in July also over the exit quarter. So, prices are holding up, obviously, which could help us achieve our targets earlier. But besides prices, most important is the integration effort and there's a lot that happens in an integration effort.

Analyst questions if India Cements can exceed the INR1,000/ton EBITDA target earlier than FY28, with management attributing potential over-performance to favorable pricing and integration efforts.

Asked by Rahul Gupta

South market demand and pricing outlook Direct
Our sense is that the South markets is getting consolidated are in good shape. So we should not feel any negative pressures as of now. Luckily, there are mega projects, which are happening in the Southern states. If I look at the commercial markets for data centers, offices, warehousing, everything is adding up. So it should be good.

Addresses concerns about historical weak pricing in the South, confirming positive demand drivers from mega projects and market consolidation.

Asked by Rahul Gupta

UltraTech + Kesoram standalone realization differential Direct
Considering the volumes, Raashi, it might be up, 0.1% or so lower. That's it. The size is very small. So it will be 2.3%, not beyond that, Raashi.

Clarifies the minimal impact of Kesoram's consolidation on UltraTech's standalone realization, providing modeling clarity.

Asked by Raashi Chopra

Brownfield expansion scope and next round of expansions Direct
Amit, I think I must have told you also that we have the blueprint for the next phase of growth. It is getting stitched and ready and we will present it to our Board. And before the end of this calendar or worst case, before the end of this financial year, we will come back with the next phase of organic growth.

Provides a timeline for the announcement of UltraTech's next phase of organic growth, signaling continuous expansion plans beyond current projects.

Asked by Amit Murarka

Rebranding strategy for Kesoram/India Cements and tolling Direct
So actually, I wouldn't want you guys to your mind getting diverted with quarterly numbers because month-after-month, the volumes are ramping up, and we should be able to conclude the brand transition program before the end of fiscal '27 next year, we should be able to compete 100%.

Clarifies the strategy and timeline for integrating acquired brands, emphasizing overall optimization and full brand transition by FY27 rather than short-term volume splits.

Asked by Amit Murarka

Organic volume growth (2%) vs. industry growth (flattish Q1) Evasive
No. Firstly, I don't like your aggressive tone. Secondly, the way to look at is if I look at UltraTech brand because as I mentioned, we have been rapidly rebranding UltraTech which has grown 6.5%. So I know there will be some amount of jigsaw puzzle in our sales mix because what we will focus on is UltraTech brand sale, which has actually grown 6.5%, whichever way you want to cut it, that's the real number.

Analyst challenges management on low organic growth (2%) after adjusting for acquisitions, but management deflects by focusing on UltraTech brand growth (6.5%) and overall sales mix, avoiding a direct answer on organic growth.

Asked by Navin Sahadeo

Intercompany elimination (UltraTech & India Cements) Direct
So intercompany elimination is between UltraTech and ICEM now, right? Sorry, this is between like cement, which is supplied to our own captive consumption for RMC. This is going to be part of life. But on a INR20,000 crores of revenue, this quarter is about INR500 crores.

Provides a specific figure for intercompany elimination, crucial for understanding consolidated financials and the impact of internal transactions between UltraTech and India Cements.

Asked by Ritesh Shah

India Cements profitability gap with UltraTech Direct
So as for the two ways, this is a good question, certainly. The UltraTech brand being generated from ICL plants gets the same price barring the INR10, which I'm keeping in UltraTech. Cost of production of that output might be still be higher because of the inefficiencies that exist. And as we progress, fiscal '28, the costs also will get aligned, prices will also be aligned. We will have parity between the profitability of ICL plants or UltraTech existing cement plants in the southern markets.

Addresses the profitability difference between India Cements and UltraTech plants, outlining the path to achieving parity by FY28 through efficiency improvements and cost alignment.

Asked by Satyadeep Jain

3 min read 5 chapters

Detailed narrative

Q1 FY26 Performance & Demand Outlook

UltraTech Cement Limited reported a consolidated volume growth of 9.7% year-on-year for Q1 FY26, including the contribution from Kesoram. Management noted a steady market environment, with government capital expenditure showing marked improvement compared to the previous year, particularly in states like Bihar, Andhra, Gujarat, and Maharashtra. Highway construction saw an 8.9% increase, with 2,108 kilometers built in the quarter. While urban housing experienced a slowdown in the first half of the calendar year, management anticipates a rebound in future quarters, and rural markets are expected to grow favorably following the monsoon season.

India Cements Integration & Turnaround Strategy

Following the acquisition concluded on December 25, 2024, UltraTech is actively implementing a recovery and growth strategy for India Cements. The current operating EBITDA for India Cements stands at INR400 per ton, after accounting for a limestone royalty of INR160 per metric ton. UltraTech aims to significantly improve this, targeting an EBITDA per ton exceeding INR1,000 by FY28. This will be achieved through a capex plan focused on efficiency and productivity improvements, including Waste Heat Recovery Systems (WHRS) and other alternate fuel technologies. The green power quotient for India Cements is projected to increase substantially from 3% to 86% by FY28.

Capacity Expansion & Long-term Growth

UltraTech commissioned 3.5 million tons of new capacity during Q1 FY26 and expects to commission an additional 10 million tons as the year progresses. The company is on track to reach a total capacity of 212 million tons within the next 15-18 months. For FY26, UltraTech is targeting a 'double-digit' volume growth, with Kesoram's volumes now integrated into the base. Management also indicated that a blueprint for the next phase of organic growth will be presented to the Board before the end of the calendar year or fiscal year, demonstrating a continuous expansion strategy to meet growing demand.

Cost Management & Financial Position

UltraTech's average cost of borrowing remained stable at 7% for the quarter, with expectations of further declines driven by potential RBI rate cuts. India Cements' borrowings have been refinanced and are now being rated AAA, reflecting improved financial health. The capex programs for India Cements are planned to be funded through a mix of debt and internal accruals, with a target to reduce India Cements' debt level to under INR50 crores, effectively achieving a net cash position by the end of the program. While pet coke prices were slightly higher, overall power and fuel costs are anticipated to decline in the coming quarters.

Regional Market Dynamics and Integration Progress

The South Indian markets are undergoing consolidation and are in good shape, benefiting from significant mega projects such as the Vadhavan port and the Maharashtra Shaktipeeth Expressway. New state leadership in Andhra Pradesh is also planning new capital and infrastructure projects, which are expected to boost cement demand. UltraTech is actively integrating India Cements' operations, including a brand transition program aimed for completion before the end of fiscal '27. This integration, along with that of Kesoram, is expected to lead to cost parity and optimized operations across the combined entity by FY28.

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