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UltraTech Cement: Operational performance improves led by healthy volumes and cost control


Sales volume was up by 16.9% YoY (+35.1% QoQ) to 41 mtpa, led by healthy pick-up in demand. This is also on account of full consolidation of India Cements during the quarter (additional volumes of 2.64 mtpa from India Cements)
Grey cement realisation has improved 1.6% QoQ (down 2% YoY) as cement prices also saw some uptick during the quarter. However, blended realization is down 4% QoQ (-3.4% YoY) on account of consolidation of India Cements (as India Cement’s realisation is ~Rs 500/ton lower than average realisation of UltraTech Cement)
Thus, revenue was up 13% YoY (+29.7% QoQ) to Rs 23,063.3 crore
Though EBITDA/ton improved 18% QoQ to Rs 1126/ton on account of further improvement in cost structure. Subsequently, EBITDA was up 59.5% QoQ to Rs 4,618.4 crores
Looking ahead, we anticipate that company’s operational performance to improve significantly over FY26E & FY27E. We estimate ~10% CAGR over the next 2 years, driven by demand pick-up in the coming period (industry demand expected at 7-8% in FY26E as compared to ~4% in FY25) and aggressive capacity additions by the company
UltraTech has added ~56 mtpa capacity in the last 2 years and further ~27 mtpa expansion is in process, which will take the total capacity to ~216 mtpa by FY27E (from ~189 mtpa at present). Furthermore, increasing prices along with a continuous focus on cost efficiency are anticipated to enhance the company's profitability. We estimate EBITDA/ton to Rs 1317/ton in FY27E (from Rs 924/ton in FY25)
We maintain Buy on Ultratech Cement with a revised target price of Rs 14,240
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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