Skip to content

    UltraTech Cem.

    ULTRACEMCOGood
    Construction Materials·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

    8
    • 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

    What Changed1

    vs Q2 FY26

    Tone shiftStrong → Good

    Key financials

    Single quarter

    06 metrics
    1. 01Sales Volume31 MT+
    2. 02UltraTech EBITDA/Ton₹966
    3. 03ICL EBITDA/Ton₹386
    4. 04Kesoram EBITDA/Ton₹755
    5. 05Fuel Cost1.8 Rs/kcal

    Guidance & targets

    11
    CategoryTargetPriority
    Capacity
    Phase 4 Expansion
    22.8 MTPA
    High
    Capacity
    Total Capacity Target
    240-245 MTPA
    High
    Capacity
    FY26 Exit Capacity
    200 MTPA
    High
    Capacity
    Green Power Share
    65%
    High
    Capacity
    Clinker Conversion Target
    1.59-1.6x
    High
    Margin
    India Cements EBITDA/Ton at Maturity
    ₹1,000/ton
    High
    Margin
    Kesoram EBITDA/Ton Target
    ₹1,000-1,200/ton
    High
    Margin
    Brand Transition Completion (ICL & Kesoram)
    100%
    High
    Capex
    Annual Capex FY27-28
    ₹10,000 crores/year minimum
    High
    Volume
    Industry Demand Growth FY26
    6-7%
    High
    Market Share
    Capacity Share Target
    32-33%
    High

    Risks & concerns

    4
    RiskSeverity

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

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

    low

    North India capacity oversupply concern with multiple peers expanding

    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

    medium

    Pet coke price increase with coal mix skewing to 48%

    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

    low

    Areas of Evasion(1)

    • Premium cement mix trajectory — deferred to offline discussion

    Q&A highlights

    3

    “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

    2 min read5 chapters

    Detailed Narrative

    01

    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.

    02

    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).

    03

    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.

    04

    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.

    05

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.