UltraTech Cement posts 20% YoY EBITDA rise as volumes outpace industry
NEWZA Editorial Team•
⚡ Key Financial Takeaways
Consolidated EBITDA reached roughly Rs 37 bn, up 20% YoY and in line with market expectations.
Domestic grey cement volumes grew about 14% YoY, beating the sector’s 9% average.
Unit operating cost rose ~8% QoQ to Rs 370 per tonne, mainly from raw‑material and fuel price pressure.
Emkay lifts its target price to Rs 13,200 and continues to rate UltraTech Cement a BUY.
The broker expects margin improvement in the second half of FY27 as operating leverage kicks in and cement prices rise.
💡 Why It Matters
UltraTech Cement is the largest cement producer in India, and its performance is a bellwether for the construction sector and broader economic activity. A 20% jump in EBITDA signals that demand remains robust despite cost inflation, while the company’s pricing power and market‑share expansion could set the tone for peers. Investors watch UltraTech closely for cues on sector health and for potential equity upside in a high‑growth, infrastructure‑driven economy.
Strong earnings amid higher costs UltraTech Cement (UTCEM) posted consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately Rs 37 billion for the quarter, marking a 20% increase from the same period last year. The figure matched both Emkay Global Financial’s own forecast and the consensus of market analysts.
Volume growth outstripping peers The company’s domestic grey cement shipments rose around 14% year‑on‑year, well above the industry’s average growth of roughly 9%. This volume expansion helped offset a marginal dip of less than 1% in grey cement realised prices quarter‑on‑quarter, although those prices were still about 2% higher than a year earlier.
Cost pressures and pricing dynamics Unit operating costs climbed about 8% quarter‑on‑quarter to Rs 370 per tonne, driven largely by a Rs 210 per tonne increase in raw‑material and fuel expenses and a drag from negative operating leverage. Despite the cost rise, blended cement realizations improved by roughly 2% sequentially, adding about Rs 130 per tonne, thanks to a 30% jump in ready‑mix concrete (RMC) sales and a 50% surge in building‑material sales.
EBITDA per tonne and margin outlook EBITDA per tonne settled at Rs 974, compared with Rs 914 in the previous quarter and Rs 1,214 in the first quarter of FY27. Emkay interprets the numbers as evidence of a solid volume base and a resilient margin profile, even in a volatile market.
Valuation and recommendation The brokerage continues to value UltraTech Cement at 17 times its projected September‑2028 enterprise‑value‑to‑EBITDA multiple, nudging its target price up 2% to Rs 13,200 from Rs 13,000. The stock currently trades at about 14 times its forward‑year EV/EBITDA, a level reminiscent of the low‑point seen during the Russia‑Ukraine conflict. Emkay therefore reiterates a BUY stance, citing the company’s scale, market‑share gains and expected operating‑leverage benefits in the second half of FY27.
Looking ahead Cement price hikes already taken in early Q3 FY27—spot rates are roughly 5% above the Q2 average—should further bolster margins. The broker anticipates that the industry‑wide operating leverage will start to materialise in the latter half of the fiscal year, potentially improving profitability across the board.
🏛️ Background & Context
The Indian cement industry has been navigating a mix of soft demand in certain months and rising input costs due to global commodity price swings. UltraTech’s ability to grow volumes faster than the industry average and to pass on price increases to customers positions it favorably against competitors that may be more constrained by cost pressures.
👁️ What To Watch Next
Key indicators to monitor include cement spot price movements in the coming quarters, any further changes in raw‑material and fuel costs, and UltraTech’s quarterly volume and margin trends, especially as operating leverage is expected to improve in the second half of FY27.
