UltraTech Cement’s September quarter (Q2FY27) result was largely decent, given the backdrop of elevated input costs and weak prices.
The company’s grey cement volumes rose 13.8% year-on-year to 35.94 million tonnes, outpacing the industry’s estimated 9% growth, indicating consistent market share gains for the company amid heightened competitive intensity. Capacity utilization rose to 71% from 66% last year. Demand was driven by infrastructure and housing projects across markets. UltraTech retained its FY27 guidance of 7–8% industry demand growth and its double-digit volume growth.
But input cost pressures have weighed. Q2’s consolidated Ebitda per tonne fell 20% sequentially to ₹974. Blended fuel costs climbed to ₹2.09/kcal from Rs1.90/kcal in Q1, despite reducing petroleum coke consumption in the overall fuel mix to around 25% from 36%. Fuel cost may further increase to ₹2.2/kcal in H2FY27. “While UltraTech is consistently gaining market share, cost inflation compels us to slash FY27E/28E/29E Ebitda by 5%/5%/9%,” said Nuvama Research.
On the bright side, logistics costs remained stable due to a seasonal surcharge waiver in rail freight and operational efficiency from reducing the lead distance. Plus, power was reduced by 12% year-on-year thanks to renewable energy and waste heat recovery systems. UltraTech achieved a key milestone by surpassing 2GW of green power capacity. The green power mix rose to 45.4% in Q2FY27 from 41.6% in Q2FY26; the target is to reach 85% by FY30.
Alongside cost control measures, UltraTech raised prices to counter inflation. More increases may be on the cards post the festive season in a relatively strong H2. Cement prices sold via the trade segment rose ₹7-10/bag month-on-month in the second half of September, with non-trade prices rising more. September exit trade prices were around 3% above the Q2FY27 average, while current spot prices are 5% higher, the management said. The full benefit of recent price hikes and improved operating leverage would be reflected in UltraTech’s Q3 earnings. UltraTech reiterated its target of achieving Ebitda/tonne of ₹1,400 by March 2028, with price hikes expected to offset cost pressures.