UltraTech Cement Limited — Q3 FY25 earnings call

Call held 28 Feb 2025

Management summary

This was a special conference call focused on UltraTech's entry into the Cables & Wires business. While no quarterly earnings were discussed, the company laid out the strategic rationale — leveraging its 135,000+ distribution touchpoints and relationships with contractors and builders. The ₹1,800 crores capex will be capital-light with 5-7x asset turns and 25%+ IRR. CFO committed this is the only non-cement adjacency for the next 5 years.

Highlights

  • Entry into Cables & Wires business announced with ₹1,800 crores capex

  • Capacity of 182.8 MTPA at end of FY25, ~28% of India's capacity

  • Target 209 MTPA by end of FY27

  • Cables & Wires plant at Jhagadiya, Gujarat — go live by December 2026

  • Expected asset turns of 5-7x and IRR of 25%+

  • Revenue mix target: 60% wires, 40% cables

  • Committed no further diversification beyond cables & wires for next 5 years

  • Per capita cement consumption at 295 kg vs 600-700 kg at peak in developed economies

Key financials

  1. Cement Capacity 182.8 MTPA
  2. Industry Capacity Share 28%
  3. C&W Capex ₹1,800 Cr
  4. Per Capita Cement 295 kg

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

Capex

  • Cables & Wires Plant Capex Capex · By FY31 · High confidence ₹1,800 crores
    Rs. 1,800 crores CAPEX required for this business.

    — Atul Daga, CFO

Capacity

  • Cables & Wires Production Launch Capacity · December 2026 · High confidence December 2026
    We will go live with the production by December 26.

    — Atul Daga, CFO

  • Cement Capacity FY27 Capacity · FY27 · High confidence 209 MTPA
    By the end of Fiscal '27, we will be at 209 million tons of capacity.

    — Atul Daga, CFO

Profitability

  • Cables & Wires ROCE Target Profitability · At maturity (FY31) · Medium confidence ~25%
    IRRs of upwards of 25%.

    — Atul Daga, CFO

Other

  • No Further Diversification Other · Next 5 years · High confidence Next 5 years
    We are not venturing into anything else. Next 5 years.

    — Atul Daga, CFO

Risks & concerns

  • Diversification away from core cement business

    medium

    Multiple analysts questioned the strategic fit. Management justified it as the only adjacency in the construction value chain, committed to no further diversification.

    Analyst acknowledged

  • Incumbent competition in cables & wires with massive capacity additions

    medium

    CLSA analyst noted ~₹12,000 crores of capacity additions by incumbents on an ₹80,000-100,000 crore industry. CFO said market is growing 12-13% so incremental capacity is justified.

    Analyst downplayed

Q&A highlights

3 direct
Assurance on no further diversification beyond cables & wires Direct
We are not venturing into anything else. Next 5 years, next 3 years, next 5 years.

Investors worried about capital allocation discipline — CFO gave an unusually strong multi-year commitment against further diversification

Asked by Ritesh Shah, Investec

Competitive positioning and right to win in cables & wires Direct
We believe there is room for one additional player. That is all.

Addresses the key concern about entering an already competitive market with incumbents expanding aggressively

Asked by Indrajit Agarwal, CLSA

Margin expectations and capital employed Direct
Total capital employed not more than Rs. 2,000 crores. We will want to be negative working capital.

Clarifies that total capital commitment including working capital stays under ₹2,000 crores — important for ROE calculations

Asked by Amit Murarka, Axis Capital

1 min read 4 chapters

Detailed narrative

Strategic Entry into Cables & Wires — Construction Value Chain Extension

UltraTech announced entry into cables & wires as the only non-cement adjacency, positioned within the construction value chain (design → construct → enable → decorate → service). The company evaluated and rejected pipes, tiles, wood adhesives, sanitary fittings, lights, fans, and furniture. Cables & wires was selected because it goes 'behind the wall' that UltraTech is already building, sharing contractor relationships and end-customer touchpoints.

Capital-Light Business Model with Attractive Returns

The ₹1,800 crores capex yields 5-7x asset turns (implying ₹9,000-12,600 crores peak revenue), with ROCE targets of ~25%. The revenue mix is expected at 60% wires and 40% cables. Working capital target is negative, leveraging UltraTech's purchasing power. Total capital employed capped at ₹2,000 crores. EBITDA margins expected in line with industry peers.

Distribution Leverage: 135,000+ Touchpoints and UBS Network

UltraTech plans to leverage its existing distribution infrastructure — 135,000+ trade touchpoints, ~2,000 technical services team members, and UBS retail stores already selling cables & wires from third parties. The company has direct relationships with EPC contractors, builders, and individual homebuilders that overlap with the wires & cables customer base.

Cement Growth Runway Remains the Core Story

India's per capita cement consumption at 295 kg compares to 600-700 kg at peak in developed economies, indicating massive headroom. UltraTech holds ~28% of India's capacity at 182.8 MTPA and targets 209 MTPA by FY27. The company reiterated focus on organic and inorganic growth in cement, with cement capital employed approaching ₹1 lakh crore.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Construction Materials earnings calls