UltraTech Cement Ltd Quarterly Results Q3 FY 25 stock analysis

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Sector Outlook: Positive

Numbers ahead of market estimates

UltraTech Cement Ltd. reported revenue from operations of Rs 171,933 million in Q3 FY25, growing 10% QoQ and 2.7% YoY. Sales volume for the quarter reached 28.81 million tonnes (up 9% QoQ and 10.6% YoY), showing growth despite weaker cement demand. However, sales realization declined to Rs 4,970/tonne (down 1.4% QoQ and 9.6% YoY). Raw material costs increased to Rs 32,962 million (up 13% QoQ and 24.1% YoY), driven by higher costs for fly ash and limestone. Logistics costs rose to Rs 38,112 million (up 6.4% QoQ and 5.3% YoY). Other expenses were Rs 23,687 million, remaining largely stable QoQ but up 4.7% YoY. Power and fuel costs stood at Rs 39,802 million (up 3.7% QoQ but down 4.7% YoY), reflecting a 4% QoQ and 13% YoY reduction in energy costs due to falling fuel prices.

EBITDA for the quarter was Rs 28,871 million (up 43% QoQ but down 11.3% YoY), exceeding market expectations. EBITDA per tonne stood at Rs 964 (up 31.7% QoQ but down 20.2% YoY), with an EBITDA margin of 16.8%. The company’s net profit (PAT) was Rs 14,735 million (up 78.6% QoQ but down 17% YoY), with a net profit margin of 8.6%. As of December 2024, UltraTech’s installed capacity was 171.11 million tonnes, with a capacity utilization of 73%. The RMC (Ready-Mix Concrete) sales volume increased to 3.17 million cubic meters (up 5.3% QoQ and 14% YoY). The company’s green power mix stood at 33.4% (up 39% YoY), including 13.5% from renewable energy sources and 19.9% from waste heat recovery systems (WHRS).

Key Concall Highlights

Regional Performance: The company saw the best price improvement in the North and West regions, with prices rising over 3%. The North region performed particularly well.
Stake Acquisition: UltraTech acquired an 8.42% stake in Star Cement for Rs 7,760 million.
India Cements Turnaround: The company plans to improve the performance of India Cements within 12 months by implementing return-focused CapEx strategies.
Mines and Assets: Final approvals for the transfer of mines in Telangana and Karnataka are pending, and the company aims to consolidate Kesoram’s assets by the end of the financial year.
Capacity Expansion: UltraTech plans to add 10–15 million tons of organic capacity by 2026, increasing its total capacity to 212 million tons.
WHRS Capacity: Waste Heat Recovery System (WHRS) capacity increased to 324 MW (from 278 MW in Q4FY24). The target is now 511 MW by FY27, covering 24% of the company’s power needs.
Renewable Energy Expansion: Renewable energy capacity grew to 752 MW (up from 612 MW). The target has been revised to 2.1 GW by FY27, expected to cover 30% of the company’s power needs.
Fuel Efficiency: The company increased pet coke usage to 58% of its fuel mix, lowering fuel costs to Rs 1.76 per Kcal from Rs 1.84 per Kcal in the previous quarter.
Acquisition Utilizations: Capacity utilization for India Cements and Kesoram stands at 57% and 70%, respectively.
Clinker Utilization: Clinker utilization during the quarter was 76%, with 6.7 million tons added. Another 3.35 million tons is expected in the next quarter.

Valuation and Outlook

UltraTech Cement showed strong improvement quarter-on-quarter, though its yearly performance was impacted by weaker cement prices and high raw material costs. Despite these challenges, the company remains focused on growth and recently added 1.8 MTPA to its capacity. It also completed the acquisition of The Indian Cements Ltd., bringing its total capacity to 171.11 MTPA. Once state approvals for the transfer of mines in Telangana and Karnataka are finalized for the ongoing Kesoram Cement acquisition, UltraTech is on track to surpass 200 MTPA cement capacity in India by FY27. This milestone will further strengthen its position as the largest cement producer in India. Additionally, increased government spending on infrastructure and strong demand in rural and urban housing are expected to drive 7-8% volume growth. These market opportunities put UltraTech in a strong position to benefit from rising demand in the cement industry.