UltraTech Cement Ltd Quarterly Results Q1 FY 26 stock analysis

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Sector Outlook: Positive

Volume-led growth and improved cost efficiency, amid seasonal challenges

UltraTech Cement Ltd. recorded a net revenue from operations of Rs. 212,755 million (down 7.8% QoQ / up 13.1% YoY), driven by annual volume growth of 9.7%. The sales volume for the quarter ended June 2025 stood at 36.83 MT. Domestic sales volume grew 8.7% YoY on a consolidated basis, which included volumes of Indian Cements. The sales realization stood at Rs. 5,165/Mt (up 2.2% QoQ / down 2.4% YoY). The raw material cost for the company stood at Rs. 38,190 million (down 12.2% QoQ / up 18.2% YoY). The logistics stood at Rs. 46,490 million (down 10.2% QoQ / up 5.0% YoY). Other costs stood at Rs 25,630 million (down 5.6% QoQ / down 0.5% YoY). The power and fuel cost stood at Rs. 48,619 million (down 6.9% QoQ / up 1.5% YoY). The improvement in operating costs was due to the increased cement capacity in Q1FY26. The quarter’s EBITDA stood at Rs. 44,103 million (down 4.5% QoQ / up 46.2% YoY), in line with market estimates of Rs. 44,090 million. EBITDA/Mt stood at Rs. 1,198 (down 5.7% QoQ / up 33.3% YoY), and the EBITDA margin stood at 20.7% (up 70 bps QoQ / down 470 bps YoY). The company earned a PAT of Rs. 22,209 million (down 10.3% QoQ / up 48.7% YoY) for the quarter ended June 2025. The net profit margin stood at 10.4% (down 29 bps QoQ / up 250 bps YoY). The grey cement capacity of 3.5 MTPA was added during the quarter ended June 2025. The RMC sales volume stood at 3.9 million cubic meters (down 2.0% QoQ / up 20.0% YoY). The primary lead distance was reduced to 370 kms, compared to 384 kms in Q4FY25 and 386 kms in Q1FY25. The company’s green power mix increased to 39.5% compared to 35.7% in Q4FY25, with the renewable power capacity rising to 1.08 GW and WHRS capacity standing at 363 MW. Demand remained strong in the East, West, and South regions, supported by heightened infrastructure activity, whereas the Central and North regions saw a decline due to seasonal disruptions, labor constraints, and delays in new project announcements.

Key Concall Highlights

UltraTech is on track to expand its cement production capacity to 211–212 million tonnes over the next 15–18 months, marking its fourth phase of growth, with a fifth phase already in planning. This expansion includes both brownfield and greenfield projects, including potential brownfield upgrades at India Cements sites. The company has already commissioned 3.5 million tonnes this quarter, with another 10 million tonnes expected by Q4FY26. With these capacity additions, UltraTech aims for double-digit growth in FY26.

India Cements, acquired in December 2024, is progressing as planned under UltraTech’s management. The integration of Kesoram assets is nearly complete, and brand transition is expected to be fully achieved by FY27. India Cements’ CapEx will be independently managed and financed, focusing on improving plant efficiency and boosting green energy usage. The group remains committed to its Rs. 1,800 crore CapEx plan for its wires and cables venture, with scope for some savings.

Operational efficiency is also being enhanced through cost optimization efforts. India Cements plans to raise its green energy contribution from 3% to 86% by FY28 via WHRS and renewable energy projects. The clinker conversion factor has improved from 1.44 to 1.49, reflecting better production efficiency.

On the demand front, government capex is picking up momentum, particularly in states like Bihar, Andhra Pradesh, Gujarat, and Maharashtra. Mega infrastructure projects such as the Vadhavan Port, new dams, and expressways are expected to fuel cement demand throughout the year. Early and widespread monsoons are also expected to boost rural market growth. Meanwhile, UltraTech continues to scale its RMC operations, having surpassed 400 plants this year, and expects to grow faster than the industry average of 5–7% per annum.

Valuation and Outlook

UltraTech Cement continues to maintain its industry leadership through a robust capacity expansion program and by focusing on operational efficiencies, despite seasonal headwinds. The company’s pan-India capacity is rapidly increasing, positioning it to capture emerging opportunities as cement demand is anticipated to recover by H2FY26, aided by supportive macroeconomic factors such as the RBI’s interest rate cuts, the government’s infrastructure push and rural recovery due to a good monsoon. The company is well-positioned to capitalize on this with a robust pipeline of capacity additions, with contributions from both brownfield and greenfield expansions. The company’s strong focus on sustainability and operational efficiency is evident through initiatives such as increased green power usage and a growing WHRS footprint, which have contributed to power cost reduction. Going forward, the management aims to not only keep pace with but outperform industry growth rates. While the quarterly performance was slightly impacted due to monsoons and geopolitical reasons, UltraTech’s capacity scale, distribution reach, and innovation-led approach position it well for long-term growth and leadership in a competitive market.