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Informist, Monday, Jul. 21, 2025

By Narayana Krishna and Shakshi Jain

HYDERABAD/MUMBAI - To improve efficiency and reduce production costs at its acquired entity, India Cements Ltd., UltraTech Cement Ltd. plans to detail a capital expenditure plan in Jul-Sept, the company management said in a post-earnings conference call.

The management aims to reduce costs of India Cements to align with current UltraTech costs by lowering power, logistics and other costs in a phased manner. The company plans to meet 86% of India Cements' power requirement through renewable energy and waste heat recovery sources by 2027-28 (Apr-Mar), UltraTech management said.

Ultratech Cement on Monday reported a consolidated net profit of INR 22.26 billion, higher than the analysts' expectations of INR 21.76 billion. The net profit rose 49% on year, but fell 10% on quarter.

The cement major's consolidated revenue rose over 13% on year to INR 212.75 billion in the June quarter. While this was the company's highest growth in seven quarters, the revenue fell short of analysts' expectations of INR 213.37 billion. Sequentially, revenue was down nearly 8%. The management attributed the Apr-Jun performance to several factors, including efforts to integrate the operations of acquired assets from Kesoram Industries Ltd. and India Cements. 

"Besides (cement) prices, a lot is happening on the integration side. It is from people, processes, products, quality, logistics, and everything is integrated, which helps us to achieve our goal," UltraTech management said.

The management said cement prices during the June quarter were favourable despite the monsoon and do not expect any negative pressure across markets as of now. The company said cement prices in the southern and eastern markets are relatively higher.  

"As of now, the prices are favorably poised in spite of the monsoon... the prices have not taken a beating yet or hold. I have seen prices improving in July also over the exit (Apr-Jun) quarter," UltraTech management said.

UltraTech said it expects power costs to be range-bound going forward, at least not to increase in the near term. For Apr-Jun, UltraTech power and fuel costs rose 1.5% on year, but fell nearly 7% sequentially to INR 48.6 billion.

The company is bullish on demand revival, driven by increased government capital expenditure, particularly in states such as Andhra Pradesh, Gujarat, and Maharashtra. The rural demand is expected to pick up on the back of a good monsoon.

"I think there is a good trigger on the demand side, particularly the change of state leadership in Andhra Pradesh. Now, again, new capital is being planned and a lot of infrastructure projects have been announced. Even in Telangana, which is still not up to the mark actually. But there are good green shoots that they will also pick up. And Tamil Nadu is also going for elections after some time. So, I think, south in terms of demand should do well and if the demand is good, hopefully, prices will improve," UltraTech said.

India Cements will continue to be an independent entity for now, UltraTech said, adding that it will revisit the merger plan only after 2026-27 (Apr-Mar) and once the efficiency improvement plan is completed. Production costs at India Cements are high compared to UltraTech and the company is planning to bring down all sorts of costs to align with the parent company's cost structure, the management said.

GROWTH AIM

UltraTech expects a double-digit volume growth in FY26, aided by robust infrastructure spending and demand revival across regions. The company is planning to commission 10 million tonnes of new cement capacity in FY26.

UltraTech management said it will prepare its next round of organic growth plans by the end of FY26 to capitalise on the country's cement demand growth, which is expected to be around 7-8% going forward. The management said there were enough opportunities for both brownfield and greenfield expansion going forward.

UltraTech expects to spend around INR 20 billion as capital expenditure per quarter, with the total capex in FY26 at close to INR 100 billion, the management said. This excludes India Cements, the management said.

The company said its plans to enter the cables and wires business are on track and the company is currently looking for land in Gujarat for the same. The capex for the project is estimated to be INR 18 billion, as announced earlier, the company said.

On Monday, shares of UltraTech ended at INR 12577 on the National Stock Exchange, up 0.6% from its previous close. Shares of India Cements ended at 343.45, down 1.1% and Kesoram Industries closed at INR 6.06, down 0.7%.  End

Edited by Saji George Titus

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