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Informist, Monday, Jul. 20, 2026

 

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--UltraTech: Geopolitical situation fluid in Q2 till now amid W Asia war
--CONTEXT: Comments by UltraTech management in post earnings conference call
--UltraTech: Highest ever Q1 performance in volumes, EBITDA
--UltraTech: Domestic demand pipeline across housing, rural, infra strong
--UltraTech: Operating leverage helped company absorb fuel costs in Q1
--UltraTech: See cement prices steady during monsoon amid high input costs
--UltraTech: Capex at INR 170 bln for next two years
--UltraTech: Co outpaced industry volumes growth over past few quarters
--UltraTech: Q2 sales may be soft amid W Asia war-led disruption, monsoon
--UltraTech: Have to keep an eye on fuel costs
--UltraTech: Operating cash flow to largely get ploughed back in cement ops
--UltraTech: Don't foresee any further investments in cables, wire ops
--UltraTech: Q2 will have full impact of West Asia war-led costs
--UltraTech: See overall cost impact of INR 130-INR 140 per tn on Q2 EBITDA
--UltraTech:As long as cement demand is there, everything else is immaterial
--UltraTech: Limestone costs rose Q1 on surge in industrial diesel prices
--UltraTech: See cement prices aligned to demand, up if demand is strong
--UltraTech: Wires, cables to have higher working capital days next 6 mos

 

By Rajesh Gajra and Astha Oriel

 

MUMBAI – UltraTech Cement Ltd. expects the September quarter to have a delayed flow-through of the surge in fuel, cement bag, and other costs due to the West Asia war, but is hopeful of strong demand momentum paving way for higher or steady cement prices helping the company soften the blow from the cost increase. "With cost escalations of the past two quarters still to be fully passed through and demand momentum of the kind we are witnessing, we see a supportive price environment as a busy season approaches," Atul Daga, business head and chief financial officer, UltraTech Cement, told investors and analysts at a post June quarter earnings conference call Monday.

 

According to Daga, the geopolitical situation in West Asia, which had escalated at the start of the June quarter and de-escalated at the end, has again become fluid. "But with a double-digit volume growth and a demand pipeline across infrastructure, housing, and urban real estate, it is as rich as it can be," he said.

 

The overall cost impact on UltraTech's earnings before interest, tax, depreciation, and amortisation per tonne will be INR 130-INR 140 in the September quarter, Daga said. The CFO said it will not only include the cost shocks from the West Asia war but also have other elements such as maintenance costs.

 

"Fuel cost storm is a yo-yo... we have to keep an eye on it and wait through it," Daga said. For the September quarter, UltraTech's management is banking on demand staying steady.

 

UltraTech's top line growth for the June quarter was largely pepped up by a 13% on-year jump in domestic volume, indicative of a strong demand. Since the cost shocks were not fully passed on to customers, UltraTech was able to record a strong bottom line growth in the June quarter.

 

"Fundamentally, we believe as long as demand is there, everything else is immaterial," Daga said. The biggest challenge for the cement industry and UltraTech in the long term would be if demand slows down, "which I don't foresee happening," he said.

 

Responding to an analyst's query whether cost inflation supporting cement pricing was a hope or an expectation by the company, the CFO, cement prices moved with the demand. "If demand is strong, all India basis, then (cement) prices can go up," he said. Daga indicated that cost curves can come down or go up but that was not necessary for prices to reduce or rise.

 

Operating leverage and cost discipline helped UltraTech absorb fuel cost shocks in the June quarter, according to Daga. The limestone raising costs, which form a significant part of the company's raw material costs, jumped up by around 12% sequentially in the June quarter, data from the post-earnings investor presentation showed. 

 

According to Daga, this was mainly due to a surge in the price of industrial diesel, which is typically the biggest component in limestone-related costs. "Industrial diesel (price) went up almost 50% from Rs. 100 (INR 100) per litre to Rs. 157 (INR 157)," he said.

 

Talking about the scorecard of the company, Daga said the June quarter was the highest-ever first quarter of a financial year for UltraTech across volume, revenue, EBITDA, and net profit. The company's volume and profitability trajectory over the past few quarters have consistently outpaced the industry, he said.

 

On investments required for executing the planned grey cement capacity addition of 15.9 million tonnes in 2025-26 (Apr-Mar) and 29.8 million tonnes in FY27, Daga said projects under execution or capacity growth will be backed by capital expenditure of about INR 170 billion in the next 2-2.5 years.

 

This will, however, be only for the cement capacity additions. The new wires and cables business will not get further investments beyond what is already planned, he said. The wires and cables business, for which the company has already made an investment of INR 8.88 billion, will be launched in the December quarter, the company said in the investor presentation.

 

The total investment planned for this business is INR 18 billion, including the INR 8.88 billion already spent, according to the presentation. Daga said the channel partners onboarding for the new business "is rapidly moving at a frantic pace...(and the) facility setup is complete."

 

The funding for the capital expenditure will largely be from internal accruals. All operating cash inflow will be ploughed back into the cement capacity expansion projects, Daga said.

 

UltraTech announced its June quarter earnings Monday. The company's consolidated net profit increased 17% on year to INR 25.99 billion on the back of a 16% revenue growth at INR 246.48 billion. Monday, shares of the company closed 1.5% higher at INR 11,903 apiece on the National Stock exchange.  End

 

Edited by Deepshikha Bhardwaj

 

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