Revenue
Margin
Demand
Guidance
Tone
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 volume; well ahead of industry (estimated 7-8%), with West/Central >15%, South/North ~15%, East slowest due to elections/labour. |
| Capacity utilisation | 81% (vs 76% in Q1 FY26) | On enlarged domestic base of 200.1 mn t; reflects strong demand pipeline and market share gains despite seasonality. |
| Revenue growth | +16% YoY | Highest-ever Q1 revenue; driven by double-digit volumes and premiumisation; absolute revenue not disclosed on call. |
| Blended fuel cost | ₹915/ton (vs ₹874/ton in Q4 FY26) | +4.7% QoQ; imported fuel price shock from Strait of Hormuz closure; coal averaged USD134/ton in Q1. |
| EBITDA | ₹5,146 crores (+12% YoY) | Highest-ever Q1 EBITDA; per ton steady above ₹1,200 despite fuel shock and ramping acquired assets. |
| PAT | ₹2,604 crores (+17.2% YoY) | Highest-ever Q1 PAT; aided by operating leverage and premium brand mix. |
| Green power share | 1,897 MW, meeting 47% of power requirements at quarter-end | 71 MW renewables + 19 MW WHRS commissioned in Q1; structural buffer against fuel cost volatility. |
| Lead distance | 360 km (down from 367 km) | Logistics optimisation saving ~₹2.5-3/ton/km annualised; supports structural cost reduction. |
| Net debt/EBITDA | 0.87x (from 0.94x at start of FY27) | Deleveraging on track; management confident of ending FY27 below 1x. |
| Capacity | 200.1 mn t domestic / 205.5 mn t total | 8.7 mn t commissioned in Q1 (Shahjahanpur, Visakhapatnam, Patratu); on track for 212.7 mn t by Mar'27 and 235 mn t by Mar'28. |
Geographic & Segment Commentary
- East: Slowest regional growth in Q1 due to elections and labour availability, but a structural demand upcycle is expected over the next 2-4 years driven by land reforms and post-election project execution.
- North & South: Each grew ~15% YoY, supported by infrastructure and urban real estate; North was a consistent price performer.
- West & Central: Grew above 15%, leading all regions; West also saw price improvements in June, with Maharashtra and Gujarat driving demand.
- India Cements: Like-for-like ex-factory revenues rose 21% YoY to ₹993 crores (vs ₹821 crores) on 19% volume growth; EBITDA/ton improved sequentially from ₹386 (Q2FY26) to ₹603 (Q1FY27); brand migration to UltraTech is 100% complete; green power to reach 86% of requirements by FY28.
- Cables & Wires (new segment): Launch on track for Q3 FY27 (Oct-Dec'26); ₹1,800 crores investment approved, ₹888 crores spent/committed; trial runs commenced, channel partner onboarding underway; within capex budget.
Company-Specific & Strategic Commentary
- Capacity Expansion: 8.7 mn t commissioned in Q1, taking domestic capacity to 200.1 mn t; ₹17,000 crores capex over next 2-2.5 years will push consolidated capacity beyond 242 mn t (grey cement to 212.7 mn t by Mar'27 and 235 mn t by Mar'28); every ton fully backed by secured limestone.
- Cost Leadership / Green Infrastructure: Green power at 1,897 MW meets 47% of total power requirements; target of 2.5-3 GW "very shortly"; lead distance down to 360 km and AFR substitution ramping up; structural buffers allowed better absorption of fuel shock than peers.
- India Cements Turnaround: EBITDA/ton improved from ₹386 (Q2FY26) to ₹603 (Q1FY27); ₹2,000 crores cost-improvement capex deployed into WHRS, preheater and cooler upgradation; green power trajectory from ~3% to 86% by FY28; conversion ratio already at 1.5x; target of ₹1,000/ton EBITDA in sight from Q4FY28.
- Cables & Wires Entry: ₹1,800 crores approved investment; ₹888 crores spent/committed; SAP/ERP in place, CRM under testing; commercial launch committed for Q3 FY27; no further investment until business matures.
- Capital Allocation: All operating cash flows to be ploughed back into growth; dividends to shareholders maintained; net debt/EBITDA at 0.87x; capex fully funded through internal accruals.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Grey cement volume growth | Double-digit for FY27 | Driven by strong demand pipeline across infrastructure, housing and urban real estate; market share gains from brand conversion of B/C brands. |
| Q2 FY27 cost per ton | +₹130-140 sequentially | Full West Asia impact plus monsoon maintenance; includes fuel, maintenance, seasonality; packing bag costs stable. |
| Capacity | 212.7 mn t grey by Mar'27; 235 mn t India by Mar'28 | Balance of ~22-25 mn t added in FY28; part of ₹17,000 crores capex program. |
| Net debt/EBITDA | Below 1x at FY27-end | Management confident despite capex and acquired asset integration; strong operating cash flow. |
| India Cements EBITDA/ton | ~₹1,000/ton in sight; full benefit from Q4 FY28 | Cost-improvement capex flowing through P&L; sequential improvement expected. |
| Cables & Wires launch | Q3 FY27 (Oct-Dec'26) | On schedule and on budget; regulatory approvals, ERP in place; channel ramp-up underway. |
| H2 FY27 costs | Likely lower than H1 if West Asia conflict subsides | Spot pet coke, coal, packaging expected to ease; ocean freight insurance premiums (currently 4-5%) should normalise. |
Risks & Constraints
| Risk | Context |
|---|---|
| West Asia conflict / fuel cost | Strait of Hormuz disruption pushed crude above $100 and coal to USD134/ton; industrial diesel rose from ₹78-80 to ₹150+/litre; insurance premiums 4-5% vs <1%. Q2 cost +₹130-140/ton. Management is fully inventory-loaded but duration remains uncertain. |
| Monsoon failure / dry spell | Rajasthan and some pockets facing dry conditions; potential water crisis could hit rural demand next year; June's dry weather boosted current volumes but may pull forward demand. Need to monitor Aug-Sep rains. |
| Industry capacity additions / oversupply | UltraTech adding 37 mn t in FY27-28; industry players may revisit expansion plans; demand must remain strong to absorb supply; any slowdown would pressure pricing. |
| Raw material cost inflation | Limestone raising costs spiked 13-14% QoQ on industrial diesel inflation; packaging bag costs up from ~₹9 to ₹12/bag in Q1; variable cost trajectory depends on fuel, bag and diesel prices. |
| Execution/integration risk | India Cements turnaround contingent on ₹2,000 crores capex completion, non-core asset sales, and operating parameters reaching UltraTech standards; any delay would push ₹1,000/ton EBITDA target beyond Q4 FY28. |
Q&A Highlights
West Asia Impact and Q2 Cost Outlook
- Question: What was the per-ton cost impact from the West Asia crisis in Q1, and what should we expect in Q2? (Rahul Gupta, Morgan Stanley; Indrajit Agarwal, CLSA; Pulkit Patni, Goldman Sachs)
- Answer: Fuel added ~₹40/ton and packing bags ~₹20/ton in Q1. Q2 will see a further ₹130-140/ton total sequential cost increase, including full war impact, monsoon maintenance and seasonality; "we cannot really say it's happening because of the war... it's a usual July, September quarter." The ₹130-140 is not on top of typical negative operating leverage; higher volumes partially offset fixed costs. (Atul Daga)
Demand, Monsoon and East India Upcycle
- Question: Will the dry June weather hurt H2 rural demand? Is East inflecting? (Indrajit Agarwal, CLSA)
- Answer: Rajasthan is dry and may face a water crisis next year; most states have received rains, still early to conclude. East was slowest in Q1 due to elections/labour, but land reforms and structural changes will drive a 2-4 year demand upcycle. Q1 regional growth: South/North ~15%, West/Central >15%, East slowest. (Atul Daga)
India Cements Merger Timeline and Turnaround
- Question: What steps remain before merging India Cements into UltraTech standalone? (Amit Murarka, Axis Capital)
- Answer: Capex program must complete, non-core land assets disposed, and operating parameters aligned with UltraTech; expected by Q4FY28 or a quarter earlier. India Cements EBITDA/ton improved to ₹603 in Q1 from ₹386 in Q2FY26; green power to reach 86% of requirements by FY28. (Atul Daga)
FY27 Volume Growth and Market Share
- Question: Can UltraTech sustain double-digit volume growth in FY27? (Pinakin, HSBC)
- Answer: Yes, targeting double-digit FY27 grey cement volume growth. Brand power, distribution reach (150,000 channel partners, ~2,000 warehouses, 477 RMC plants) and B/C brand conversions (UltraTech brand grew 21.3% YoY) drive market share gains without vacating the B/C customer segment. (Atul Daga)
Structural Cost Savings
- Question: Revisit the ₹200+ cost saving target; what is visible on a run-rate basis? (Prateek Kumar, Jefferies)
- Answer: Lead distance down 7 km to 360 km (worth ₹2.5-3/ton/km annualised), clinker conversion improved to 1.5x, power consumption and power rates down due to green mix; a comprehensive annual number will be provided at year-end. (Atul Daga)
Capital Allocation and Dividends
- Question: How will growing cash flow be allocated across cement capex, dividends and Cables & Wires? (Amit Murarka, Axis Capital; Ashish Jain, Macquarie)
- Answer: "We are fully booked... all operating cash flows will get ploughed back into growth" plus dividends; no further Cables & Wires investment until business matures; Board views dividend as percentage of profits; expect good dividends. (Atul Daga)
Pricing, Brand and Retail Mix
- Question: Will brand power matter as RMC/institutional share rises? (Raghav Maheshwari, Equirus Securities)
- Answer: India is a retail homebuilder market; UltraTech's sales are ~65-66% retail, ~35% institutional, ~3.5% RMC even with 477 RMC plants. As long as India is retail-driven, cement will remain a branded play; RMC will be a surrogate only when the market matures. (Atul Daga)
Capacity Trajectory and Industry Additions
- Question: What is UltraTech's capacity roadmap beyond FY28? Any plans beyond 240 mn t? (Raashi, Citigroup; Ritesh Shah, Investec)
- Answer: Exit Mar'27 at 212.7 mn t; Mar'28 exit at 235 mn t in India (37 mn t added FY27-28). Industry capacity additions to be recalibrated as players revisit plans; team already working on plans beyond 240 mn t; inorganic opportunities will be examined if attractive. (Atul Daga)
Cables & Wires Working Capital
- Question: What working capital profile should we expect for Cables & Wires? (Ritesh Shah, Investec)
- Answer: Higher initial working capital during ramp-up; supply chain financing and proximity to Hindalco (4-hour lead) should bring it to ~30 days by Q1 FY28. (Atul Daga)
Key Takeaway
UltraTech delivered its highest-ever Q1 FY27: domestic grey cement volumes grew 13.1% YoY, capacity utilisation hit 81%, EBITDA was ₹5,146 crores (+12% YoY) and PAT ₹2,604 crores (+17.2% YoY), all despite a sharp imported fuel cost shock from the West Asia crisis. The quarter marked 8.7 mn t of new capacity commissioning (domestic capacity 200.1 mn t), 100% brand migration of India Cements and Kesoram to UltraTech (brand grew 21.3% YoY), and India Cements' EBITDA/ton rising to ₹603 from ₹386 a year ago. Strategy remains growth-led: ₹17,000 crores capex over 2-2.5 years to exceed 242 mn t consolidated capacity, Cables & Wires launch in Q3 FY27, and continued deleveraging (net debt/EBITDA at 0.87x). Management guides double-digit FY27 volume growth and expects Q2 FY27 cost pressure of ₹130-140/ton sequentially before H2 normalisation if the war eases. Watchpoints: monsoon progress, fuel prices, and industry supply additions.