UltraTech Cement capacity expansion and synergies strengthen long-term earnings visibility

Investment View and Recommendation

In its July 20, 2026 Q1 FY27 result update, Choice Equity Broking retained its BUY rating on UltraTech Cement, citing accelerating acquisition synergies, industry-leading capacity expansion and structural cost leadership. Choice considers UltraTech Cement its preferred large-cap cement company, supported by its scale, disciplined capital allocation, market-share gains and improving utilisation, which provide long-term earnings visibility.

The broker expects double-digit volume growth in FY27E, supported by a constructive pricing environment, and noted that Q1 FY27 exit prices remained firm. The target price is Rs 15,210 per share.

Q1 FY27 Financial Performance

UltraTech Cement reported consolidated revenue of Rs 246.5 billion in Q1 FY27, up 15.9 per cent year on year and down 4.5 per cent quarter on quarter. Revenue was ahead of Choice's estimate of Rs 241.6 billion. EBITDA was Rs 50.2 billion, up 13.7 per cent year on year and down 10.4 per cent sequentially, compared with the broker's estimate of Rs 49.4 billion. Adjusted PAT of Rs 26.0 billion exceeded the estimate of Rs 24.6 billion by 5.6 per cent.

Total sales volume, including Kesoram and India Cement, was broadly in line with Choice's estimate. Realisation and EBITDA per tonne were also above estimates, although total cost per tonne was higher than expected. EBITDA margin declined by 38 basis points year on year to 20.3 per cent.

Capacity Expansion and Strategic Initiatives

Management highlighted an aggressive growth programme. Consolidated grey-cement capacity crossed 205.5 million tonnes per annum after 8.7 million tonnes per annum was commissioned during the quarter.

Capacity is planned to increase from 196.8 million tonnes per annum in FY26 to 242.5 million tonnes per annum by FY28E, through greenfield and brownfield projects. UltraTech Cement also plans to enter the wires and cables business, with a planned investment of Rs 18,000 million and a targeted commercial launch in Q3 FY27.

Operating Developments

• UltraTech Building Solution outlets increased 21 per cent year on year to 5,802.
• Average lead distance declined to 360 km.
• Renewable power capacity rose 35 per cent year on year to 1.46 GW, with green power representing 45.6 per cent of the energy mix.
• Ready Mix Concrete revenue increased 22 per cent year on year, supported by 477 plants across 170 cities.
• Trade sales represented 66 per cent of sales, while bagged cement and direct sales represented 80 per cent and 62 per cent, respectively.

Earnings Outlook

Choice forecasts volume growth from 154.3 million tonnes in FY26 to 199.7 million tonnes in FY29E. Revenue is expected to increase from Rs 885.1 billion to Rs 1,263.5 billion over the same period.

Choice marginally increased its FY27E revenue, EBITDA and PAT estimates by 1.5 per cent, 0.5 per cent and 1.3 per cent, respectively.

Valuation

Choice values UltraTech Cement on an EV/CE basis, applying 3.8 times FY28E EV/CE to derive a one-year target price of Rs 15,210 per share.

Key Risks

• Q2 FY27 cost inflation of Rs 120-130 per tonne could result from geopolitical disruption affecting imported fuel costs.
• Monsoon-related operating pressure could temporarily weigh on margins.