Metrics raised 6
- FY27 domestic grey cement volume growth guidance: double-digit (Q1 FY27 at 13.1% vs estimated industry growth of 7-8%)
- Domestic grey cement capacity target: 212.7 MT by Mar'27 and ~235 MT by Mar'28, consolidated beyond 242 MT (prior 200 MT target crossed a year early)
- India Cements EBITDA/ton target: ₹1,000/ton (from ₹603/ton in Q1 FY27 current trajectory)
- Consolidated EBITDA/ton target: ₹1,400/ton by Jan-Mar'28 (from >₹1,200/ton in Q1 FY27), conditioned on normalized fuel/no war
- Green power capacity target: 2.5-3 GW (from 1,897 MW at quarter end)
- Q2 FY27 unit cost guidance: +₹130-140/ton sequentially, including full fuel flow-through, monsoon maintenance and operating deleverage
Event Participants
Executives
1 Atul Daga
Analysts
11 Amit Murarka, Ashish Jain, Indrajit Agarwal, Pinakin, Prateek Kumar, Pulkit Patni, Raashi, Raghav Maheshwari, Rahul Gupta, Ritesh Shah, Siddharth Mehrotra
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Domestic grey cement volume growth | +13.1% YoY | Highest-ever Q1 volumes; well ahead of estimated industry growth of 7-8%, translating into market share gains |
| Total sales volume | ~40 million tons (Q1) | FY26 total sales were 145 million tons; RMC constituted 3.5% of sales |
| Revenue growth | +16% YoY | Highest-ever Q1 revenues |
| EBITDA | ₹5,146 crores | +12% YoY; highest-ever Q1 EBITDA, crossing ₹5,000 crores |
| EBITDA per ton | >₹1,200 | Held steady despite the sharpest imported fuel cost shock in recent memory |
| PAT | ₹2,604 crores | +17.2% YoY |
| Capacity utilization | 81% | Up from 76% in Q1 FY26, on enlarged domestic capacity of 200.1 million tons |
| Power & fuel cost | ₹915/ton | +5% QoQ from ₹874/ton; blended coal at US$134/ton |
| Packing bag cost | ~₹12/bag | Up from ~₹9/bag; contributed ~₹20/ton to Q1 cost inflation |
| Lead distance | 360 km | Down from 367 km QoQ; ~7 km reduction worth ₹2.5-3/ton/km annualized |
| Green power capacity | 1,897 MW | Met 47% of total power requirements at quarter end |
| Net debt / EBITDA | 0.87x | Down from 0.94x at start of FY26; all growth capex funded by internal accruals |
| UltraTech brand growth | +21.3% YoY | Post 100% conversion of Kesoram and India Cements brands to UltraTech |
Geographic & Segment Commentary
East Region: Slowest-growing region in Q1 FY27, partly due to elections and labour availability. Management expects a structural demand upcycle over the next 2-4 years driven by land reforms and post-election public spending, describing East as a "good demand upcycle" in the making.
South & North Regions: Domestic grey cement volumes grew a shade below 15% YoY in both regions. South led June exit price improvements; North was "more or less a consistent performer" during the quarter.
West & Central Regions: Fastest-growing regions with volumes up above 15% YoY. Pricing in these regions remained steady during the quarter.
India Cements (acquired operations): Like-for-like revenue (ex-freight) grew 21% YoY to ₹993 crores (vs ₹821 crores), with the reported ₹1,013 crores reflecting the shift to ex-factory sales reporting; volumes grew 19% YoY. EBITDA/ton climbed sequentially to ₹603 from ₹509 in Q4 FY26 and ₹386 in Q2 FY26 — an unbroken improvement. Brand migration to UltraTech is 100% complete, ~₹2,000 crores of cost-capex (WHR, preheater, cooler upgradations) is being deployed, and green power is targeted to rise from ~3% to 86% of power requirements by FY28.
Housing & Urban Real Estate: Accounts for ~55-60% of India's cement consumption. Mumbai property registrations grew ~6% in calendar 2026 with strong unit sales across top-8 cities; Mumbai's Slum Rehabilitation Authority is set to redevelop ~850 acres, and developers continue aggressive land banking, underpinning urban cement demand.
Company-Specific & Strategic Commentary
Brand Migration & Premiumization: Kesoram and India Cements brands converted 100% to UltraTech in Q1 FY27 — a quarter early. Customers previously buying B/C-category brands were upgraded to UltraTech at a price premium without losing market share; UltraTech brand grew 21.3% YoY. Retail constitutes ~65-66% of sales (institutional ~35%, RMC ~3.5%), making the trade mix the core premiumization engine.
Capacity Expansion: 8.7 million tons of new capacity commissioned in Q1 FY27 (Shahjahanpur, Visakhapatnam, Patratu), taking domestic capacity to 200.1 million tons and total to 205.5 million tons — crossing 200 million tons a year early. ₹17,000 crores capex over the next 2-2.5 years will take consolidated capacity beyond 242 million tons (grey cement at 212.7 million tons by Mar'27 and ~235 million tons by Mar'28); every ton is backed by secured limestone.
Green Energy & Cost Structure: Green power at 1,897 MW (71 MW renewables + 19 MW WHRS commissioned in Q1) met 47% of total power requirements at quarter end; targeting 2.5-3 GW shortly. AFR substitution and lead distance reduction to 360 km continue to lower structural costs.
Cables & Wires (New Business): ₹1,800 crores investment program on schedule and budget; ₹888 crores spent or committed. Channel partner onboarding, facility setup, trial runs, regulatory approvals and SAP/ERP systems are complete; CRM under testing. Product launch reaffirmed for Q3 FY27 (October-December 2026).
Competitive Positioning: UltraTech has consistently outpaced the industry — Q1 FY27 volume growth of 13.1% vs industry growth of ~7-8%; historical quarterly data shows UltraTech growing volumes at 1.5-2x industry rates with ₹400-500/ton EBITDA advantages. Management stated intent to "grow like a challenger and not an incumbent."
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Grey cement volume growth (FY27) | Double-digit | Management explicitly targeting double-digit growth; Q1 FY27 at 13.1% vs estimated industry growth of 7-8% |
| Q2 FY27 unit costs | +₹130-140/ton sequentially | Full war-related fuel flow-through from July, monsoon maintenance costs and operating deleverage; packing bag costs expected to stay stable |
| Net debt / EBITDA (FY27 exit) | Below 1x | Management confident; all growth capex funded by internal accruals |
| India Cements EBITDA/ton | ₹1,000/ton in sight | Full benefit of the capex program flowing through P&L from Q4 FY28 |
| Consolidated EBITDA/ton | ₹1,400/ton by Jan-Mar '28 | Conditioned on no war / normalized fuel environment |
| Domestic grey cement capacity | 212.7 MT by Mar'27; ~235 MT by Mar'28 | ₹17,000 crores capex over 2-2.5 years; industry additions to be recalibrated as peers revisit expansion plans |
| Green power capacity | 2.5-3 GW shortly | From 1,897 MW currently; India Cements to reach 86% green power by FY28 |
| Cables & wires launch | Q3 FY27 (Oct-Dec '26) | On schedule and on budget; working capital elevated for initial ~6 months, then stabilizing toward ~30 days |
Risks & Constraints
| Risk | Context |
|---|---|
| West Asia conflict / fuel cost shock | Q1 opened with the Strait of Hormuz effectively closed; crude crossed $100 and coal costs "hit the roof." Ocean freight insurance premiums rose to 4-5% vs <1% pre-war. Q2 will absorb the full cost impact (₹130-140/ton); conflict duration remains uncertain. |
| Monsoon deficit / water stress | Dry June and a "very dry patch" in Rajasthan could translate into rural demand weakness and a water crisis next year; August-September rainfall will determine severity. |
| State capex moderation | Aggregate state capex in April-May grew a modest 2% YoY, with slower coal/refinery output in May. Management views these as timing effects rather than trend changes. |
| Cost pass-through & pricing risk | Industry expects prices to hold broadly steady through the monsoon due to cost escalation. If fuel costs normalize quickly and demand softens, pricing could come under pressure in H2. |
| Integration execution | Acquired assets (India Cements) are still ramping to system profitability; completion of the ₹2,000 crores cost-capex and disposal of non-core land assets are prerequisites for the ₹1,000/ton EBITDA target and potential merger by Q4 FY28. |
Q&A Highlights
Capital Allocation & Dividends
- Question: With operating cash flow likely exceeding ₹20,000 crores next year against ₹17,000 crores of committed capex, how will surplus cash be used across dividends, cement capex, and scaling cables & wires? (Amit Murarka, Axis Capital)
- Answer: All operating cash flows will be ploughed back into growth, alongside shareholder dividends; no further investment in cables & wires until the business matures. Dividends are viewed as a percentage of profits, and the Board expects to deliver good dividends. (Atul Daga)
India Cements: Turnaround & Merger Path
- Question: What steps remain before contemplating merging India Cements into UltraTech? (Amit Murarka, Axis Capital)
- Answer: The capex program and disposal of non-core land assets must complete — expected by Q4 FY28 or a quarter earlier; operating parameters still need to align with UltraTech standalone performance. EBITDA/ton trajectory: ₹386 (Q2 FY26) → ₹400 → ₹509 → ₹603 (Q1 FY27). (Atul Daga)
Q2 FY27 Cost Outlook
- Question: What was the Q1 cost impact and what should we expect in Q2, including operating deleverage? (Rahul Gupta, Morgan Stanley)
- Answer: Q1 saw fuel cost rise ₹25-40/ton (₹874→₹915/ton) and packing bags from ₹9 to ₹12/bag (~₹20/ton). Q2 will bring a further all-in sequential increase of ₹130-140/ton covering fuel, maintenance seasonality and deleverage — a normal monsoon-quarter impact, not entirely war-related. (Atul Daga)
Demand: Monsoon, East Region & Industry Growth
- Question: Will dry June weather hurt rural demand in H2? Is East seeing a step change? What is industry volume growth? (Indrajit Agarwal, CLSA; Raashi, Citigroup)
- Answer: Rajasthan is in a dry patch — demand impact likely next year via water crisis; July has brought widespread rains across most states. East was slowest in Q1 due to elections and labour availability, but a 2-4 year structural upcycle is expected from land reforms and post-election spending. Industry Q1 growth estimated at 7-8%. (Atul Daga)
Fuel Costs, Mix & Cost-Saving Program
- Question: With pet coke correcting, is coal more favourable? How is the >₹200/ton 2-year cost-saving program tracking? Why did limestone raising costs spike 13-14% QoQ? (Indrajit Agarwal, CLSA; Prateek Kumar, Jefferies; Siddharth Mehrotra, Kotak)
- Answer: Pet coke is now more expensive on energy terms, making domestic coal more attractive. Savings are visible quarterly — lead distance down 7 km to 360 km (₹2.5-3/ton/km), clinker conversion at 1.5x, lower power rates from green mix; a comprehensive number will be given at year-end. Limestone cost spike is driven by industrial diesel rising ~50% from ₹78-80/litre pre-war to ₹150s. Blended coal was US$134/ton in Q1; current levels ~₹2/Kcal with the company fully inventory-loaded. (Atul Daga)
Regional Volume Performance
- Question: Can you split the 81% utilization regionally? (Prateek Kumar, Jefferies)
- Answer: East was the slowest in April-June (elections, labour availability); South and North grew a shade below 15%; West and Central grew above 15%. (Atul Daga)
Brand Power & Retail Market Thesis
- Question: How is UltraTech gaining share on both volumes and pricing despite its large base? Is Indian cement a brand play or commodity play? (Rahul Gupta, Morgan Stanley; Raghav Maheshwari, Equirus)
- Answer: Decades of consistent quality, 76 operating facilities, ~2,000 warehouses, 150,000 channel partners, 477 RMC plants, 5,000+ UBS stores and 16,000+ employees create unmatched brand trust; B/C-category customers were converted to UltraTech at a premium without share loss. India remains a retail market — RMC is ~20% of industry (3.5% of UltraTech sales) and urbanization at 35% (→39% by 2030 vs Indonesia's 59%) keeps individual homebuilders dominant, so cement will remain a branded play like TMT steel and paints. (Atul Daga)
Pricing & Structural Margins
- Question: Will Q2 pricing average higher than Q1? If input costs fall in H2, will margins structurally hold or shift to volume focus? (Raashi, Citigroup; Ashish Jain, Macquarie)
- Answer: June exit prices improved led by East and South; prices expected to hold broadly steady through the monsoon given cost escalation. Prices move with demand — if demand stays strong, prices can rise even if the cost curve comes down. (Atul Daga)
Capacity Roadmap: Beyond 240 MT
- Question: With the bulk of expansion concluding in FY28, are there plans beyond — organic or inorganic? What is the FY27-28 addition as a share of the market? (Raashi, Citigroup; Ritesh Shah, Investec)
- Answer: Inorganic opportunities will be examined; drawing board work for beyond 240 MT is underway with details to follow. Exit capacity: ~212.7 MT by Mar'27 and ~235 MT by Mar'28 (37 MT across FY27-28). Some industry players are revisiting expansion plans, so industry capacity additions will be recalibrated. (Atul Daga)
Cables & Wires: Launch & Working Capital
- Question: What working capital days for cables & wires, given sourcing from Hindalco with 4-hour lead distance? Any revenue/scale guidance? (Ritesh Shah, Investec; Siddharth Mehrotra, Kotak)
- Answer: Working capital will be elevated for the initial ~6 months for inventory ramp-up, then stabilize toward ~30 days with supplier financing. On ambition: "sky is the limit" — the business aims to be profitable, grounded and grow with the market. (Atul Daga)
Five-Year Challenges
- Question: What are the top 3 challenges for UltraTech over a 5-year horizon? (Siddharth Mehrotra, Kotak Securities)
- Answer: The only structural risk would be a demand slowdown, which is not foreseen given urbanization tailwinds (35%→39% by 2030); the practical challenge is having enough capacity — hence expansion to 240+ MT and further plans. (Atul Daga)
Key Takeaway
UltraTech Cement delivered its highest-ever Q1 in FY27: domestic grey cement volumes grew 13.1% YoY, ahead of an estimated 7-8% industry growth, with capacity utilization at 81% (up from 76%) on an enlarged 200.1 MT domestic base. EBITDA rose 12% to ₹5,146 crores and PAT 17.2% to ₹2,604 crores, with per-ton EBITDA held above ₹1,200 despite the West Asia fuel shock. Strategic execution stayed on track: Kesoram and India Cements brands migrated 100% to UltraTech (brand growth +21.3%), 8.7 MT of capacity was commissioned, green power reached 1,897 MW (47% of power needs), and cables & wires is slated for a Q3 FY27 launch within its ₹1,800 crores budget. Management guides double-digit FY27 volume growth, net debt/EBITDA below 1x, and India Cements toward ₹1,000/ton EBITDA. Watch items: ₹130-140/ton Q2 cost pressure, West Asia normalization, Rajasthan's dry spell, and East's structural demand inflection.