ULTRACEMCO - UltraTech Cement Ltd Share Price

In the Q2 FY26 Earnings Call, UltraTech Cement Limited's management provided an optimistic outlook for the company's growth trajectory. They reported that sales exceeded 31 million tons for the quarter ending September 2025, despite adverse weather conditions. The brand experienced a remarkable year-over-year growth of 13.2%. Growth metrics indicated a 22.3% increase when not accounting for recently acquired assets, and 6.8% growth inclusive of India Cements and Kesoram's operations.

Management highlighted that the upcoming quarters would mix existing high-performance assets (166.76 million tons capacity) with rapidly ramping acquired assets (Kesoram at 10.75 million tons and India Cements at 14.75 million tons). They project brand conversions to be completed by June 2026.

On cost management, various one-off expenses negatively impacted EBITDA, leading to a lower cost per ton expected to decrease by around INR100 in the upcoming quarter due to reduced maintenance shutdowns. Current EBITDA per ton stands at INR966 for existing assets, with India Cements and Kesoram reported at INR386 and INR755, respectively.

On expansion plans, UltraTech aims to achieve a capacity of 200 million tons by the end of FY26, targeting increased operations in northern and western markets with a proposed addition of 22.8 million tons of capacity. They reiterated a commitment to maintaining clinker investments, aiming for a conversion factor of 1.6x by 2029. The expansion will primarily be funded through internal accruals, with minimal borrowing intended.

Management also noted the expected debut of their cables and wires business in Q3 CY26 and cautioned on a demand trend where rural markets should continue to thrive. Additionally, they anticipate that government infra projects and urban housing demand will drive steady cement consumption moving forward. Overall industry growth is projected at 6-7% for the full year.

Question 1: "Just on this expansion plan that you've announced. So, like after this, I just wanted to know how much more scope is there given that this is just focused on North and West?"

Answer: We aim to reach about 240-245 million tons by Fiscal '29, with an additional scope of 20-25 million tons possible beyond that. There are opportunities not just for brownfield expansions, but also greenfield clinker-based units as we continuously acquire mining rights and land.

Question 2: "Out of the INR 200 per ton, which you summed up under various items, how much of it will go away essentially in Q3?"

Answer: We expect maintenance costs to decrease significantly, with at least INR 100 per ton likely to come down in Q3.

Question 3: "On industry demand, on your best estimate, how was the demand in the second quarter? Do you think the earlier guidance of 6% to 7% industry growth is achievable?"

Answer: I definitely believe that our earlier guidance is achievable. Demand is strong and we are witnessing overall volume growth of around 4.5% to 5% for this quarter, so I'm confident.

Question 4: "On the commissioning timeline for the expansions. Will it get bunched up in FY '28, or will it be spread over '28, '29, '30?"

Answer: The commissioning of expansions will not be bunched up. It will be evenly spread out, and we will provide a detailed schedule in the next quarter.

Question 5: "Where do you see stronger demand over the second half of the year; between government capex and individual homebuyers?"

Answer: The rural markets indicate strong growth, and the individual homebuyer segment is seeing significant demand, bolstered by government announcements for new infrastructure projects.

Question 6: "Is there any kind of a window or timeline for which we're not allowed to increase prices post-GST?"

Answer: There are no restrictions on increasing prices. Prices may rise if there's notable demand, cost pressure, or material shortages, but no specific timeline limits our ability to adjust prices.

Question 7: "What would be the total capex number for the next two years on ongoing projects?"

Answer: We anticipate a minimum outgo of about INR 10,000 crores per year for our ongoing projects.

Question 8: "On Kesoram, given the decline in EBITDA, will this be offset by improvements from rebranding to UltraTech?"

Answer: Yes, there is an offset expected from rebranding. While we've seen some declines, converting to the UltraTech brand provides at least an INR 15 to INR 20 delta on pricing.

Question 9: "You mentioned a premiumization benefit out of GST. Can you explain that?"

Answer: Premiumization occurs as affordability improves due to GST. Consumers might shift from lower-tier brands to UltraTech once premium products are within reach, enhancing our market position.

Question 10: "What amount of clinker capacity are you planning to add cumulatively in the 22 million tons capex?"

Answer: We plan to add a total of about 15.68 million tons in clinker capacity, which includes specific plants and debottlenecking across various regions.