UltraTech Cement Limited — Q1 FY26 earnings call

Call held 18 Oct 2025

Management summary

Q2 FY26 was a strong monsoon quarter with >31 MT sales and 13.2% UltraTech brand growth. However, EBITDA/ton was dampened by ~₹200/ton of one-off costs (maintenance shutdowns, advertising, staff increments). The major highlight was the Phase 4 expansion announcement — 22.8 MTPA at industry-leading capex cost of <₹500 crores/MT, focused on North and West markets. India Cements integration continues with ₹2,014 crores capex committed.

Highlights

  • Sold >31 million tons of cement in monsoon quarter

  • UltraTech brand grew 13.2% YoY; rural markets grew 13%

  • Consolidated growth of 6.8% with ICL and Kesoram in base; 22.3% without them

  • UltraTech existing assets EBITDA/ton at ₹966; India Cements at ₹386/ton; Kesoram at ₹755/ton

  • Phase 4 expansion announced: 22.8 MTPA (18 MT North + 4.8 MT West) at <₹500 crores/MT

  • India Cements capex of ₹1,592 crores for efficiency + ₹422 crores for brownfield expansion

  • One-off cost impacts of ~₹200/ton from maintenance (617 kiln days shutdown), advertising (+₹50 cr), staff increments

  • Green power mix reached 42%; target of 65% by end of current growth phase

Key financials

  1. Sales Volume 31 MT+
  2. UltraTech EBITDA/Ton ₹966
  3. ICL EBITDA/Ton ₹386
  4. Kesoram EBITDA/Ton ₹755
  5. Fuel Cost ₹1.8/kcal
  6. Clinker Conversion 1.48×

What they filed

Q1 FY27: revenue up 15.9%, net profit up 17.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue16,294 17,779 23,063 21,275 19,607 +20%21,830 +23%25,799 +12%24,648 +16%
EBITDA2,026 2,893 4,608 4,406 3,089 +52%3,911 +35%5,599 +22%5,015 +14%
Net profit708 1,363 2,475 2,221 1,238 +75%1,729 +27%3,000 +21%2,604 +17%
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.

Guidance & targets

Capacity

  • Phase 4 Expansion Capacity · FY28-FY29 · High confidence 22.8 MTPA
    We are embarking on the next phase of our growth with 22.8 million tons of incremental capacity.

    — Atul Daga, CFO

  • Total Capacity Target Capacity · FY29 · High confidence 240-245 MTPA

    Previously 211-212 MTPA → 240-245 MTPA

    We are now sticking our program to reach about 240-245 million tons, which will get completed by fiscal '29.

    — Atul Daga, CFO

  • FY26 Exit Capacity Capacity · FY26 · High confidence 200 MTPA
    We will complete or exit this financial year with 200 million tons of capacity under our belt.

    — Atul Daga, CFO

  • Green Power Share Capacity · End of current expansion phase · High confidence 65%
    We will reach about 65% of green power by the end of our current phase of growth.

    — Atul Daga, CFO

  • Clinker Conversion Target Capacity · Post Phase 4 expansion · High confidence 1.59-1.6x

    Previously 1.54x → 1.59-1.6x

    We will actually reach 1.59 to 1.6 post this expansion.

    — Atul Daga, CFO

Margin

  • India Cements EBITDA/Ton at Maturity Margin · FY28 · High confidence ₹1,000/ton
    The ICL assets will start generating EBITDA per ton of INR1,000.

    — Atul Daga, CFO

  • Kesoram EBITDA/Ton Target Margin · By June 2026 · High confidence ₹1,000-1,200/ton
    We will be crossing INR1,000, INR1,100, INR1,200 mark by the end of June '26.

    — Atul Daga, CFO

  • Brand Transition Completion (ICL & Kesoram) Margin · By June 2026 · High confidence 100%
    We are expecting to complete the brand transition for these acquired assets, not later than June '26.

    — Atul Daga, CFO

Capex

  • Annual Capex FY27-28 Capex · FY27-28 · High confidence ₹10,000 crores/year minimum
    I will have about INR10,000 crores minimum per year, outgo.

    — Atul Daga, CFO

Volume

  • Industry Demand Growth FY26 Volume · FY26 · High confidence 6-7%
    My confidence is going up higher if I look at my own volume growth.

    — Atul Daga, CFO

Market Share

  • Capacity Share Target Market Share · Medium-term · High confidence 32-33%

    From 28% today

    We are confident that our capacity share, which today stands at 28% will go up to 32%-33%.

    — Atul Daga, CFO

Risks & concerns

  • North India capacity oversupply concern with multiple peers expanding

    medium

    CFO dismissed concern saying UltraTech will continue gaining share and capacity utilization won't be an issue. Hinted at locational advantages — 'deserts are desserts and city is a city.'

    Analyst downplayed

  • One-off cost escalation — 617 kiln days shutdown in a single quarter

    low

    Management proactively disclosed and quantified impact at ~₹200/ton. Expected to normalize by ₹100/ton in Q3.

    Management acknowledged

  • Pet coke price increase with coal mix skewing to 48%

    low

    Fuel cost up to ₹1.8/kcal from ₹1.78/kcal. However, Clean Energy Cess removal under GST 2 will benefit UltraTech more than peers due to higher coal consumption.

    Management acknowledged

Areas of evasion (1)

  • Premium cement mix trajectory — deferred to offline discussion

Q&A highlights

3 direct
Phase 4 expansion scope and beyond Direct
There is definitely scope for 20-25 million tons more beyond '29... There will be possibilities of greenfield clinker-based units also.

Reveals that beyond Phase 4 (240-245 MT), another 20-25 MT is possible, with greenfield options being explored

Asked by Amit Murarka, Axis Capital

One-off cost items and EBITDA/ton bridge Direct
617 kiln days shutdown... impact of INR100 per ton... ballpark INR100 will come down next quarter.

Quantifies one-off impacts — maintenance alone was ₹100/ton, total ₹200/ton delta expected to normalize significantly in Q3

Asked by Amit Murarka, Axis Capital

GST 2 impact on premiumization Direct
Roughly INR30 impact has happened favorably in the hands of the end consumer. The person who was wanting to buy at INR360 either will switch down or might be incentivized to buy a premium brand.

GST reduction of ~₹30/bag creates premiumization tailwind — consumers may trade up to UltraTech from cheaper brands

Asked by Sumangal Nevatia, Kotak Securities

2 min read 5 chapters

Detailed narrative

Phase 4 Expansion: 22.8 MTPA at Industry-Leading Capital Efficiency

UltraTech announced Phase 4 expansion of 22.8 MTPA — 18 MT in North and 4.8 MT in West — at less than ₹500 crores per MT, well below industry average. This includes 15.68 MT of clinker capacity (two 10,000 TPD lines plus debottlenecking). The expansion takes total capacity to 240-245 MT by FY29, with further 20-25 MT potential beyond that. Capex will be ~₹10,000 crores per year for FY27-28, funded largely by internal accruals.

UltraTech Brand Growth at 13.2% — Premiumization Accelerating

UltraTech as a brand grew 13.2% YoY, driven by rapid conversion of India Cements (31%) and Kesoram (55%) output. Premium cement share and rural market growth both at 13%. GST 2 reduction of ~₹30/bag creates premiumization tailwind. UBS stores sold 21% of total sales, and RMC has crossed 400 plants (4% of cement volumes).

India Cements: ₹2,014 Crores Capex Program for Turnaround

India Cements capex program totals ₹2,014 crores — ₹1,592 crores for efficiency (debottlenecking, 21 MW WHRS, 192 MW RE, efficiency improvements) and ₹422 crores for 2.4 MT brownfield expansion at Chennai and Rajasthan (>20% IRR). Indonesian coal assets divested to fund debt reduction. Brand transition at 31%, targeting 40%+ by December quarter. EBITDA/ton target of ₹1,000 by FY28 with net debt/EBITDA of ~0.5x.

One-Off Cost Impacts Mask Underlying Improvement

Q2 saw ~₹200/ton one-off cost impact: maintenance shutdowns (617 kiln days, ₹100/ton), advertising (₹50 crores = ₹15/ton), staff increments (₹94 crores = ₹25/ton), and operating leverage from lower QoQ volumes (₹70/ton). Maintenance is expected to normalize by ₹100/ton in Q3. Fuel cost at ₹1.8/kcal with coal:petcoke mix at 48:44.

GST 2 Creates Dual Benefit — Consumer Affordability and Coal Cess Reduction

GST rate reduction benefits consumers by ~₹30/bag, potentially driving premiumization. More importantly, the Clean Energy Cess on coal is being removed, which disproportionately benefits UltraTech due to its higher coal consumption in the fuel mix. CFO confirmed no fuel cost inflation expected despite pet coke price movements.

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