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

ICICIdirect Research 02 May 2025 DISCLAIMER

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

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