$ULTRACEMCO Q1FY27: Strong Volume Growth Amid Rising Cost Pressures

$ULTRACEMCO achieved a consolidated EBITDA per tonne of ₹1,214 in Q1FY27, maintaining its profitability above the ₹1,200 threshold for the second consecutive quarter despite elevated input costs and global supply chain disruptions. The management reiterated its long-term objective of hitting ₹1,400 EBITDA per tonne by Q4FY28, contingent on geopolitical stability. Market Share Expansion Driven by Rural and Housing Demand: Consolidated sales volumes rose 12% year-on-year to 41.31 million tonnes, generating a 16% growth in overall revenues. Driven primarily by rural residential demand, UltraTech’s volume growth comfortably outpaced the broader cement industry’s estimated 7–8% growth rate, highlighting continued market share gains for the industry leader. Sequence of Rising Cost Factors to Weigh on Q2: Sequentially, fuel costs climbed by ₹40 per tonne and packaging expenses added ₹50–60 per tonne in Q1. Operating cost inflation is expected to increase sequentially by another ₹130–140 per tonne in Q2 FY27 due to higher fuel costs (projected at ₹2/kcal), scheduled maintenance shutdowns, and seasonal weakness from monsoon rains. Aggressive Capacity Additions and Long-Term Capex: UltraTech commissioned 8.7 million tonnes per annum (mtpa) of new capacity in Q1 FY27, pushing its domestic grey cement capacity to 200.1 mtpa (205.5 mtpa overall). The company aims to expand its total capacity to 237 mtpa by FY28, supported by a planned capital expenditure of ₹17,000 crore over the next two to three years funded through internal accruals. Valuation Cap and Re-rating Catalysts: Shares trade at approximately 16 times FY28 estimated EV/EBITDA, reflecting limited scope for near-term valuation expansion. Market analysts anticipate that major stock re-rating triggers—specifically cement price hikes and potential raw material cost relief—will only materialise in the second half of the fiscal year.