India Cements Q2 FY27 Earnings Call — Analysis (NSE: INDIACEM)
UltraTech delivered 13.8% volume growth in Q2FY27 with 71% capacity utilization, absorbing fuel inflation via price hikes while scaling up its newly launched Ultravolt wires and cables business.
Result quality: strong — Margin expansion. Management sentiment: optimistic.
The take
Q2FY27 Net Profit Growth 21% ( +21% YoY ) . New guidance — FY27 ultratech total capital expendi… ₹10,000 Cr . New story: Brand premium and market share gains .
Results
Volume grew 13.8% YoY with 71% capacity utilization (up from 66% YoY) and net profit increased 21% YoY, despite fuel costs rising 13% QoQ to ₹51.5 per bag.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Volume Growth | 13.8% | +13.8% | yoy · Q2FY27 |
| Net Profit Growth | 21% | +21% | yoy · Q2FY27 |
| Capacity Utilization | 71% | +500bps | yoy · Q2FY27 · vs 66% in Q2FY26 |
| Domestic Cement Capacity | 204.7 MTPA | point_in_time · Q2FY27 · Sep-26 | |
| H1FY27 Capex | ₹5,882 Cr | none · H1FY27 · of ~₹10,000 Cr full-year target | |
| Net Debt to EBITDA | 1.26x | +0.32x | sequential · Q2FY27 · vs 0.94x as of Mar-26 |
| Fuel Cost per Bag | ₹51.5 | +₹6.5 | yoy · Q2FY27 · vs ₹45 per bag |
| Thermal Fuel Cost per kcal | ₹2.09 | none · Q2FY27 | |
| Premium Cement Share | 37% | none · Q2FY27 · of total cement sales | |
| Blended Cement Share | 67.3% | none · Q2FY27 · of total cement sales |
Guidance
Management maintained FY27 capex guidance at ~₹10,000 Cr, guided net debt/EBITDA below 1.0x by March 2027, and reiterated an exit EBITDA target of ₹1,400 per ton by March 2028.
What management committed to
- We will stick to INR10,000 crores for full year capex in FY27. — INR10,000 crores, FY27
- Remaining power and control cable lines will be commissioned through the second half of FY27. — H2FY27
- We will not stop before 10,000 UBS stores, which should happen in the next 3 years, by FY28-29. — 10,000 stores, FY29
Key themes
Capacity expansion and pricing discipline
How the narrative shifted
- Demand as the kingmaker: Demand is the strongest support for the cement industry; we expect strong momentum till March '29.
- Brand premium and market share gains: UltraTech continues to convert premium customers and maintain trade ratios at 65-67%.
- Turnaround of acquired assets: India Cements turnaround is on track with current EBITDA per ton at ₹500 and capex program to deliver ₹1,000 by Q4FY28.
- Structural cost advantage build-out: Green power at 2 GW, 47% of needs from non-fossil sources, and AFR scaling; cost program delivering.
- Greenfield capacity expansion: Now explicitly hinting at further organic growth beyond 240 MT.
- Cables & wires diversification: Emerged from future plan to active business; real revenue stream now.
- Fuel cost volatility and West Asia risk: Now more specific: pet coke at $180, fuel cost up to INR51.5 per bag.
- Pricing power returning: With capacity sold out, pricing power has returned; spot realizations 5% above Q2 average and further increases expected.
- Operating leverage benefit: Volume growth is absorbing fixed costs, driving margin expansion; other fixed costs per ton down 6% YoY.
Operational commentary
- Commissioned 4.6 MTPA cement capacity in September 2026 (3.6 MTPA greenfield Petnikota plant in Andhra Pradesh and 1.0 MTPA debottlenecking across 3 units), bringing domestic capacity to 204.7 MTPA.
- Launched Wires and Cables business under brand 'Ultravolt' on September 3, 2026, committing ₹1,100 Cr out of the planned ₹1,800 Cr capex for 78,000 tons annual copper processing capacity with 80,000+ retail touchpoints.
- Added 116 MW of renewable power and 10 MW waste heat recovery systems (WHRS), reaching 2 GW total captive green power and 47% green power mix.
- Commissioned Alternative Fuel and Raw material (AFR) systems at 2 plants, taking thermal substitution rate to 7.2%.
- Expanded UltraTech Building Solutions (UBS) network to over 6,500 stores, accounting for over 25% of trade sales, targeting 10,000 stores by FY29.
- Commenced planned kiln retrofits, preheater height increases, and WHRS installations at acquired India Cements plants to structurally improve operating cost profile.
Analyst Q&A
Q. What is the expected variable fuel cost inflation in H2FY27 given elevated pet coke prices at $180/ton?
Inventory buffer will cushion Q3FY27; fuel cost per kcal is running at ~₹2.1 to ₹2.2 and is expected to remain stable around ₹2.2/kcal through H2FY27 unless pet coke surges towards $300/ton.
Q. Will capex in Wires and Cables expand beyond the ₹1,800 Cr approved plan?
The Board has not approved capex beyond ₹1,800 Cr; the installed capacity of 78,000 tons copper consumption already makes UltraTech #2 in capacity and can generate ₹16,000-18,000 Cr revenue at current copper prices.
Q. What is the purpose of the corporate guarantee issued to UHG Holdings?
UHG Holdings (held 41% UltraTech, 9% Grasim, 50% Hindalco) is borrowing to procure aircraft and ships for group business use, with the corporate guarantee enabling finer borrowing rates.
Q. Do you have low-price fixed contracts on fuel or polymer to outperform industry cost curves in H2?
Management declined to disclose commercial contract details on the call.
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