ULTRACEMCO

Eyes Expansion as Price Recovery Remains Elusive

delivered a strong Q3FY26 earnings beat, with consolidated EBITDA rising 27% QoQ to ₹3,916 crore, driven by robust volume growth and disciplined cost management. Despite muted pricing trends, the company’s strategic focus on scale, efficiency, and integration of acquired assets helped cushion margins. With a large capex pipeline and improving asset quality, UltraTech remains well-positioned for long-term growth. Volumes and Profitability - Cement volumes rose 15% QoQ to 38.9 million tonnes, supported by festive demand and infrastructure activity. - EBITDA per tonne improved to ₹1,007, up from ₹914 in Q2. - Contributions from India Cements and Kesoram helped reduce pricing sensitivity. Pricing and Realizations - January saw price hikes of ₹6–8 per bag, translating to a ₹3–4 per bag uplift in realizations. - Pricing remains volatile, with recovery still gradual across regions. - Management continues to prioritize volume-led growth over near-term pricing gains. Cost Savings and Margin Outlook - Planned savings: ₹300–350 per tonne, with ₹86 per tonne saved in FY25. - Cumulative savings expected to cross ₹100 per tonne by FY26-end. - Operating margin in Q3FY26: 12.3%, with normalization targeted at 14.5–15% over FY27–28. Capex and Expansion Plans - FY26 capex guidance: ₹10,000 crore, focused on capacity and integration. - Capacity addition: 8–9 mtpa in Q4, another 12 mtpa by FY27, targeting 235 mtpa by FY28. - Net debt-to-EBITDA: 1.08x (Dec-end), expected to ease to 0.8–0.9x by March-end. Valuation and Analyst View - ICICI Securities values UltraTech at 18x FY27 EV/EBITDA, with a target price of ₹12,300. - Analysts remain positive on volume visibility, falling costs, and asset quality improvements, though pricing remains a key monitorable.