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UltraTech Cem.
Our verdict on UltraTech Cem. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The company has spent INR 197 crores so far and placed orders worth INR 500 crores, with the project remaining on schedule for a Q3 FY27 launch. (2 in progress, 1 met across 3 tracked commitments)
“I believe and I'm very confident that we'll reach the mark of 1x and be in 0.8, 0.9x net debt EBITDA by the end of this fiscal year.”
The clinker conversion factor has improved to 1.49 from 1.45, showing steady progress toward the long-term target. (2 in progress across 2 tracked commitments)
“And this 1.54 CC ratio target, that is by FY '27, we are looking at? ... In the middle of FY ’27 and FY ’28, when we complete the previous phase of expansion”
Consolidated sales volumes grew by 6.9% YoY in Q2 FY26, which is below the double-digit target, though the UltraTech brand specifically saw 13.2% growth. (1 missed across 1 tracked commitment)
“Consolidated Sales Volumes* 33.85 [mtpa] 6.9% [Growth YoY]”
Targeting efficiency improvements for India Cements assets to reach specific EBITDA levels. — target: over INR1,000 per ton (+3 more commitments)
“this definitely is going to take us over INR1,000 per ton, as committed by the end of fiscal '28.”
Expectation of power and fuel cost declines. — target: Declines
“Ashish Jain: Okay. So just last question on power and fuel, will we see further increase? Atul Daga: No, no. I think we will see declines now.”
See the full cited Management analysis of UltraTech Cem.
How durable is the business?
The cost moat is strengthening through the green energy transition; Green Power Mix reached 39.5% in Q1 FY26 compared to 27.9% in the previous year's first quarter. (3 expanding)
“Today, almost 43% of our power needs are being met from green sources. We have committed to reach about 85% of our power requirements from green energy by the end of fiscal 2030.”
Grey Cement remains the core revenue driver, showing strong domestic revenue growth of 14.6% YoY, though volume growth moderated to 6.8% compared to the previously noted 19%. (1 expanding)
“Grey Cement (Domestic) Q2 FY26 15,217 Growth^ (YoY) 14.6%”
The company is aggressively expanding its capacity moat, targeting 212.2 mtpa by FY27, up from 183.4 mtpa in March 2025. (5 expanding)
“It's an expression of our strategy to build scale that compounds in cost efficiency, in market reach, in raw material security and in sustainability. Every ton of capacity we add reinforces every ton that came before it.”
Grey Cement remains the core revenue driver, showing 11.4% revenue growth and 8.7% volume growth year-on-year, including the impact of the India Cements acquisition. (2 expanding)
“Grey Cement – Domestic (Incl. India Cements) 17,856 11.4%”
Green power mix reached 42% this quarter, with a clear target to reach 65% by the end of the current growth phase to reduce thermal power costs. (2 expanding)
“Okay. So on the green power mix, we've reached 42%... We will reach about 65% of green power by the end of our current phase of growth.”
See the full cited Business Model analysis of UltraTech Cem.
Where does growth come from?
The company has shown a significant improvement in its clinker conversion factor, jumping from 1.44 to 1.49 in a single quarter, which directly enhances volume output without increasing raw clinker production. (1 accelerating, 4 steady across 5 signals)
“Also on the clinker conversion ratio, it's now 1.48x how much more can it go to... We have targeted to reach about 1.54x. That road map is already there... 1.54x is our target to reach by fiscal '28.”
The company is rapidly accelerating its transition to green power, with the mix increasing from 27.9% to 39.5% in just one year, significantly reducing reliance on thermal power. (1 accelerating across 1 signal)
“But bags became a crisis in the month of March... our incremental cost on bags was approximately INR90 crores... Costs, let's say, bags from INR9 to INR15 a bag, that's a INR6 delta.”
Ready-Mix Concrete (RMC) is a high-growth segment, with revenue increasing 23% YoY and the plant footprint expanding by 81 units in a single year. (3 accelerating across 3 signals)
“Number of Plants 397, 81 YoY; Revenue (₹ Crores) 1,826, 23% YoY”
Consolidated sales volumes grew by 9.7% YoY, reaching 36.83 million tons. While domestic grey cement grew 8.7%, overseas volumes surged by 45%, indicating accelerating international traction. (2 accelerating, 1 decelerating across 3 signals)
“Consolidated Sales Volumes 36.83 [Million tons] 9.7% [Growth % YoY]”
Ready-Mix Concrete (RMC) is showing steady growth, having crossed the 400-plant mark this year. Management views this as a high-margin, accretive business that will continue to expand. (2 steady, 1 accelerating across 3 signals)
“We know that RMC will keep growing. We have already crossed 400 mark this year, we'll keep growing.”
See the full cited Future Growth analysis of UltraTech Cem.
What could break the thesis?
EASING. Clinker conversion (the ratio of cement produced to clinker used) improved to 1.49x in Q1 FY26 compared to 1.44x in the previous year's first quarter. (5 easing)
“We have targeted to reach about 1.54x. That road map is already there and let's see how things shape up beyond that.”
Rising costs of other building materials like steel and PVC could potentially dampen demand in the Individual Home Builder (IHB) segment. [DEMAND]
“barring cement, all other building materials have become a lot more expensive, as you mentioned, steel, if you look at PVC or other commodities as well. Is it causing a demand concern for the overall IHB segment?”
Fuel costs have stabilized or are expected to decline. While pet coke prices consumed during the quarter were slightly higher than previous periods, management explicitly stated they expect fuel costs to decline moving forward. (1 easing)
“Fuel costs, as you have always been tracking have been in control... Pet coke prices consumed during the quarter were slightly higher as compared to previous periods... No, no. I think we will see declines now.”
The risk remains active as the Rupee devaluated to 94.85 as of March 31st, resulting in a mark-to-market hit of approximately INR 30 per ton (INR 120-130 crores total). (1 stable)
“INR30 a ton. INR120 crores, INR130 crores... it's noncash debit to the P&L but so be it.”
EASING. Despite industry fragmentation, UltraTech achieved a 2.2% sequential improvement in grey cement realization, suggesting improved pricing power or better product mix. (1 easing)
“Realisation improved 2.4% yoy and 2.2% qoq.”
See the full cited Risk analysis of UltraTech Cem.
UltraTech Cem. analysis by filing period
Read the full thesis on UltraTech Cem.
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