Analyst Concall
UltraTech says high summer heat may hit Apr-May volume
This story was originally published at 20:24 IST on 28 April 2025
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--UltraTech: FY26 capex seen INR 90 bln-INR 100 bln
--CONTEXT: Ultratech Cement mgmt comments in post-earnings analyst concall
--UltraTech: Urban realty have shown some signs of slowdown
--UltraTech: US tariffs may have indirect impact on ocean freight costs
--UltraTech: Cement prices saw improvement in April from Mar end
--UltraTech: Kesoram to get rebranded to UltraTech over period of time
--UltraTech: India Cements to be rebranded to UltraTech by Apr 2027
--UltraTech: High summer heat poses challenge to infra, housing Apr-May
--UltraTech: Jan-Mar volume from Kesoram 1.53 mln tn
--UltraTech: See FY26 organic volume growth in double digit
--UltraTech: Ocean freight rates spiking, may rise further
NEW DELHI – Soaring summer temperature will pose challenges for growth in sales volume of the cement sector in Apr-May, the management of UltraTech Cement Ltd. said Monday. Speaking in a conference call with analysts and investors after announcement of the March quarter earnings, UltraTech Chief Financial Officer Atul Daga said the heat wave that is prevailing in the country will slow down construction activity.
In the long-term, however, the company expects the government's focus on infrastructure and housing projects, along with increased rural and urban demand, to lead to a sustainable volume growth of 7-8%. Daga said the company should start seeing improvement in sales performance or volume uptake in all the parts of the country. "Urban real estate has shown some signs of slowdown but this, I believe, as per experts, is only temporary and we will start seeing urban housing demand to go up further," Daga said.
Daga said he is confident that UltraTech, on a standalone basis, will record double-digit volume growth in 2025-26 (Apr-Mar). He said this will get further bolstered with the additional capacity, and sales volumes, from the recently acquired Kesoram Cement Ltd. asset. At a consolidated level, the sales volume from The India Cements Ltd., in which the company recently acquired a majority stake, will also add to the overall volume growth.
In March 2024, UltraTech concluded the acquisition of Kesoram Cement, a wholly-owned subsidiary of Kesoram Industries Ltd., having cement factories in Telangana and Karnataka in an all-share deal. But after completing regulatory procedures, the full management control of the asset came to UltraTech only in March this year, Daga said. Prior to that, it was under partial control of UltraTech.
The sales volume from the Kesoram Cement plants was 1.53 million tonnes in the March quarter, according to Daga. Excluding volumes from Kesoram and India Cements, the like-to-like sales volume growth of UltraTech was only 5% on year, as against the consolidated sales volume growth of 17%.
Daga said Kesoram Cement will get rebranded to UltraTech over "a period of time". To a query on whether the company will allow India Cements to stay as an independent brand, Daga said the company will get into its rebranding exercise also and gradually convert the India Cements brand to UltraTech brand. The full transition for India Cements brand to UltraTech will take around two years, Daga said.
UltraTech holds around 81.5% stake in India Cements, and the first thing will be to comply with the regulatory requirement of minimum public shareholding of 25% for which UltraTech will bring down its stake to 75%, Daga said. UltraTech would not be acquiring 100% of India Cements. "It is not required; with 75% we have good control on the performance of the company," Daga said.
Giving an update on UltraTech's capital expenditure plans for FY26, Daga said it would be about INR 90 billion to INR 100 billion, of which INR 70 billion will be towards strategic investments. UltraTech's capex spend was INR 94.28 billion in FY25. To a query on the company's capex plan in FY27, Daga said it will not be as high as FY26 as "most of the expansion plan will start coming to a close."
On current cement pricing scenario in the country, Daga said the prices on the ground in April so far have seen improvement as compared to the end of March. On costs, Daga said the overall cost of coal, petcoke have not seen "too much of a movement" in April. "We have also seen the...various announcements which the US government has made about the tariffs which are having an indirect impact on ocean trade also," he said. Ocean freight costs are spiking and could rise further, and "we will have to wait and watch on how things settle down and how the costs behave," Daga said.
On Monday, shares of UltraTech Cement closed 1% lower at INR 12,114 on the National Stock Exchange. End
Edited by Ashish Shirke
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