UltraTech Cement (CMP: Rs 12,337; Market Cap: Rs 3,63,546 crore; Nifty: 25,299), India's largest cement manufacturer, is entering the seasonally stronger second half of FY27 amid improving demand and pricing trends. Cement prices have firmed up following industry-wide hikes of Rs 10-15 per bag in October, which have largely held across markets. With construction activity gaining momentum after the monsoon and the recent correction in crude oil prices offering the possibility of lower fuel costs, the company could see an improvement in margins over the coming quarters, which is why it's our tactical pick for this week.
Operationally, Q2 FY27 performance remained healthy, with consolidated cement volumes growing 13 percent YoY to 38.2 million tonnes and revenue increasing 18.8 percent to Rs 23,295 crore. The EBITDA per tonne rose 7 percent YoY to Rs 974, although it declined 20 percent sequentially due to higher fuel costs. PAT increased 21.3 percent to Rs 1,501 crore. Domestic grey cement volumes grew 13.8 percent, reflecting healthy demand, a better product mix, and contributions from acquired businesses.
On the pricing front, all-India average cement prices increased by around Rs 9 per bag (3 percent) MoM in October, translating into a 9 percent YoY rise. This improvement reflects the Rs 10-15 per bag price hikes implemented across markets, most of which have been sustained. Further increases are expected after the festive season, which could support realisations in the coming months.
With cement prices firming up, the focus now shifts to input costs, where the recent correction in crude oil prices could provide some relief. Imported pet-coke prices increased 61 percent YoY to $188 per tonne in October, while South African coal prices rose 56 percent to $128 per tonne. To manage higher fuel costs, UltraTech has reduced pet-coke’s share in its fuel mix to around 25 percent from 45 percent a year ago. The recent correction in Brent crude to around $92 per barrel from the October peak of approximately $117 could offer further relief, as pet-coke prices generally follow crude movements with a lag. This could improve cement spreads and support EBITDA per tonne over the coming quarters.
Demand trends are also improving as monsoon disruptions ease and construction activity picks up. Infrastructure spending, government capex, and individual house-building activity are supporting volumes, with the North, South and East witnessing relatively stronger trends. UltraTech is targeting double-digit volume growth in FY27, against expected industry growth of 6-8 percent.