UltraTech Cem. Q1 FY27 Earnings Call — Analysis (NSE: ULTRACEMCO)
UltraTech reports highest-ever Q1 with 13.1% domestic volume growth, EBITDA of ₹5,146 Cr, and PAT of ₹2,604 Cr, driven by strong demand and market share gains.
The take
Q1FY27 Revenue ₹24,648 Cr ( +16% YoY ) . New guidance — FY27 domestic grey cement volume gro… double-digit . New story: Brand premium and retail market dynamics .
Results
Q1 FY27 domestic grey cement volumes grew 13.1% YoY, revenue rose 16% YoY to ₹24,648 Cr, EBITDA reached ₹5,146 Cr (+12% YoY), and PAT hit ₹2,604 Cr (+17.2% YoY).
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Domestic grey cement volume growth | 13.1% | +13.1% | yoy · Q1FY27 |
| Revenue | ₹24,648 Cr | +16% | yoy · Q1FY27 |
| EBITDA | ₹5,146 Cr | +12% | yoy · Q1FY27 |
| Profit After Tax | ₹2,604 Cr | +17.2% | yoy · Q1FY27 |
| Capacity utilization | 81% | +5pp | yoy · Q1FY27 · from 76% in Q1FY26 |
| Operating EBITDA per ton | above ₹1,200 | +flat | sequential · Q1FY27 · steady vs prior periods |
| India Cements EBITDA per ton | ₹603 | +₹94 | sequential · Q1FY27 · from ₹509 in Q4FY26 |
| Net debt to EBITDA | 0.87x | −0.07x | sequential · Q1FY27 · from 0.94x at start of FY27 |
Guidance
Management targets double-digit domestic volume growth for FY27 and expects a sequential cost increase of ₹130–140/ton in Q2 FY27.
What management committed to
- We are targeting double-digit [domestic grey cement] volume growth this year [FY27]. — double-digit, FY27
- I would expect the cost to go up by INR130 to INR140 per ton, all put together [in Q2 FY27 vs Q1 FY27]. — INR130 to INR140 per ton, Q2FY27
- EBITDA of INR1,000 per ton for India Cements remains very much in sight with the full benefit of the capex program flowing through the P&L from Q4 fiscal '28. — INR1,000 per ton, Q4FY28
- We reaffirm commissioning and product launch in Q3 fiscal '27, October - December '26 quarter, precisely as committed [for the cables and wires business]. — Q3FY27
- We will be within our capex program, which we had announced earlier [for cables and wires, investment of ₹1,800 Cr]. — within ₹1,800 Cr, project duration
- Our belief is, and we are confident that this year [FY27], we'll end the net debt to EBITDA below 1x. — below 1x, FY27
- We'll take our consolidated capacity beyond 242 million tons with grey cement capacity to reach 212.7 million tons by the end of fiscal '27 and further balance to be completed in the next year [FY28]. — 212.7 MnT and 242 MnT, FY27,FY28
- [Standalone] EBITDA per ton [of ₹1,400] is for January-March '28 quarter without any war. — INR1,400 per ton, Q4FY28
- Wires and cables [working capital] ... coming down to 30 days plus-minus ... April-June '27 should be a period to see a stable number. — ~30 days, Q1FY28
- Industry volume growth [for Q1FY27] should be around 7% to 8%. — 7% to 8%, Q1FY27
Key themes
Demand resilience, brand premium, and capacity expansion
How the narrative shifted
- Strong demand across infra, housing, and urban real estate: Management sees a robust demand pipeline from government infrastructure projects and urban housing, providing confidence for sustained volume growth.
- Brand premium and retail market dynamics: India's cement market is predominantly retail (65-66%), where brand trust commands a premium; UltraTech's brand conversion success demonstrates strong pricing power.
- Input cost volatility and war impact: West Asia conflict has driven fuel and packing bag costs higher; management expects Q2 cost spike but sees H2 relief if war de-escalates.
- Aggressive capacity expansion: UltraTech is executing a large capex program to reach 242 MnT, commissioning ahead of schedule, all backed by limestone and funded via internal accruals.
- Acquired assets turnaround (India Cements): The India Cements acquisition is delivering sequential EBITDA improvement; brand migration complete, cost capex underway, targeting ₹1,000/ton EBITDA by Q4FY28.
- New business diversification (cables and wires): The cables and wires project is on track for Q3 FY27 launch; initial working capital ramp-up but no additional capex beyond committed ₹1,800 Cr.
- Market share gains and competitive outperformance: Management highlights consistent volume and profitability outperformance vs industry, driven by brand, network, and quality, targeting double-digit volume growth.
Operational commentary
- Brand migration for Kesoram and India Cements to UltraTech 100% complete; UltraTech brand volumes grew 21.3% YoY, converting B/C-category buyers to premium A-category at higher price points.
- 8.7 million tons of new grey cement capacity commissioned in Q1 (Shahjahanpur, Visakhapatnam, Patratu), taking domestic capacity to 200.1 MnT and total to 205.5 MnT; projects under execution for 212.7 MnT grey by end FY27 and beyond 242 MnT total, all backed by secured limestone.
- Green power capacity reached 1,897 MW (47% of power mix), with 71 MW renewables and 19 MW WHRS added; aim to reach 2.5–3 GW shortly.
- Cement lead distance reduced to 360 km (from 367 km), improving freight costs.
- Cement prices constructive; exit prices improved in June, led by East and South, Central/West steady, North consistent; industry expects prices to hold broadly steady through monsoon.
- India Cements turnaround: sequential EBITDA/ton improvement from ₹386 in Q2FY26 to ₹603 in Q1FY27; conversion ratio now 1.5x; cost-improvement capex of ~₹2,000 Cr to lift green power from 3% to 86% by FY28.
- Cables and wires project on schedule and budget; trial runs commenced, channel partner onboarding rapid; launch reaffirmed for Q3 FY27 (Oct-Dec '26), capex within ₹1,800 Cr.
- Input costs: fuel cost rose 5% QoQ (₹874 to ₹915/ton); packing bag cost spiked to avg ₹12/bag from ₹9; industrial diesel price surge drove limestone raising costs higher.
- Retail remains core: 65–66% of sales are trade/retail; 477 RMC plants and 5,000+ UBS dedicated outlets support brand premium and pricing power.
- Demand drivers cited: Maharashtra shipbuilding cluster, Odisha deep seaport, Tamil Nadu data centres, Ahmedabad-Dholera rail corridor, metro expansions, NIIF infusion, property registrations growth.
Analyst Q&A
Q. How do you see capital allocation given growing cash flows, and any plans to scale up cables and wires further?
All operating cash flows will be ploughed back into growth and dividends. As of now, I don't foresee any requirement for further investment in cables and wires. Capital allocation remains very committed to cement and shareholders.
Q. What is the sequential cost increase expected in Q2, including war impact?
Costs to go up by INR130 to INR140 per ton, all put together, including maintenance, fuel, and some deleverage. I cannot alienate what is because of war.
Q. Are you targeting double-digit volume growth for FY27?
Yes, we are targeting double-digit volume growth this year.
Q. Will you provide an update on the comprehensive cost-saving numbers for the year?
It is better to look at it on an annual basis. Lead distance has come down, clinker conversion improved, but at the end of the year we will give a comprehensive number. Quarter-by-quarter comparisons may mislead.
Q. What are the top three challenges for UltraTech over a five-year horizon?
The biggest challenge would be if demand slows down, which I don't foresee. Beyond that, the challenge is that we don't have enough capacity and must keep expanding.
Research and educational content only. Not investment advice.