UltraTech Cement gains from pricing, volume growth and India Cements turnaround

Investment View and Q1FY27 Summary

Prabhudas Lilladher’s July 21, 2026 Q1FY27 result update describes Ultratech Cement’s operating performance as inline, supported by healthy volume growth and improved pricing. The broker retains its BUY recommendation and its FY27E and FY28E estimates.

PL considers Ultratech Cement the best-positioned sector player because of its scale, execution capability, strong balance sheet, capacity additions, cost initiatives and market-share gains. The broker expects volume and EBITDA to compound at 11% and 17%, respectively, over FY26–FY28E.

Q1FY27 Financial Performance

Consolidated volume growth was driven by housing and rural demand. Average blended realisation rose 3.3% year on year and 3.4% quarter on quarter, reflecting cement-price increases across regions. Domestic grey-cement sales volume grew 12.7% year on year after adjusting for India Cements inter-company volumes.

Cost Trends and Profitability

The consolidated EBITDA margin declined 38 basis points year on year to 20.3%, although EBITDA per tonne increased 1.4% year on year to Rs 1,214 and was marginally above PL’s Rs 1,209 estimate.

• Raw-material cost: Fell 7% year on year to Rs 967 per tonne.
• Power and fuel cost: Declined 0.6% to Rs 1,312 per tonne due to a lower pet-coke mix.
• Freight cost: Was flat year on year at Rs 1,261 per tonne as lead distance declined to 360 km.
• Other expenses: Increased 11% year on year to Rs 773 per tonne, reflecting higher industrial diesel, limestone and packaging costs.

Reported PAT grew 17% year on year to Rs 26,023 million, but was below PL’s Rs 27,446 million estimate.

Demand and Pricing Outlook

Management remains constructive on demand from infrastructure, housing, commercial real estate and urban redevelopment. It estimated industry demand growth at about 7–8% in Q1FY27, with Ultratech Cement outperforming the industry.

• The East is expected to see a structural demand upcycle.
• Management flagged potential demand pressure in Rajasthan next year following weak rainfall and water shortages.
• Cement pricing is expected to remain broadly stable during the monsoon, although sustained recent price hikes are important for margins.
• Management guided for Rs 130–140 per tonne of cost inflation in Q2FY27 from fuel, maintenance shutdowns and seasonality.
• The cost environment is expected to improve in H2FY27 if conditions in West Asia normalise.
• Renewable energy supplied about 47% of power requirements at the end of Q1FY27.

India Cements Turnaround and Expansion Plans

India Cements’ Q1FY27 volume grew 18% year on year to 2.58 million tonnes, while EBITDA per tonne improved to Rs 604. The India Cements and Kesoram brand conversion was completed ahead of schedule.

Management plans around Rs 20,000 million of India Cements capex for waste-heat recovery, preheater and cooler upgrades, and renewable energy. The initiatives target EBITDA of Rs 1,000 per tonne, with full benefits expected from Q4FY28.

Capacity Expansion, New Businesses and Leverage

Ultratech Cement plans Rs 1,70,000 million of capex over the next 2–2.5 years to reach roughly 242–242.5 million tonnes per annum of capacity by FY28, backed by limestone reserves.

The wires and cables project remains on schedule and budget for commercial launch in Q3FY27, although working capital is expected to be elevated initially. Management expects net debt to EBITDA to remain below 1x in FY27.

Valuation and Target Price

PL’s target price of Rs 13,832 values Ultratech Cement at 18x March 2028E EBITDA of Rs 2,31,509 million. After deducting forecast net debt of Rs 91,247 million from enterprise value, PL derives shareholder value of Rs 40,75,920 million, or Rs 13,832 per share.

The stock traded at 15.7x FY28E EV/EBITDA at the report’s CMP.