UltraTech Cement volume growth and pricing recovery offset near-term cost pressure

Investment View

Motilal Oswal Financial Services Limited reported on October 19, 2026 that UltraTech Cement delivered in-line 2QFY27 earnings, supported by strong volume growth. The broker reiterated its Buy recommendation and maintained its FY27E and FY28E earnings estimates.

Motilal Oswal expects UltraTech Cement to extend its lead over peers through capacity expansion, market-share gains, cost leadership and cash-flow generation. However, elevated input costs remain a near-term challenge.

2QFY27 Financial Performance

UltraTech Cement reported consolidated 2QFY27 revenue of Rs 23,300 crore, EBITDA of Rs 3,720 crore and adjusted PAT of Rs 1,500 crore, representing year-on-year growth of around 19 per cent, 20 per cent and 22 per cent, respectively. Revenue, EBITDA and adjusted PAT were 6 per cent, 5 per cent and 2 per cent above Motilal Oswal’s estimates.

RMC revenue grew around 29 per cent year on year, while white cement revenue increased around 4 per cent.

Operating Performance and Cost Trends

Operating profitability improved despite higher costs. EBITDA per tonne rose around 7 per cent year on year to Rs 974, ahead of the broker’s estimate of Rs 948. Operating margin expanded by around 20 basis points year on year to approximately 16 per cent.

However, opex per tonne increased around 5 per cent year on year and 8 per cent quarter on quarter, driven by higher variable costs, freight and other expenses. Fuel costs increased to Rs 51.5 per bag, while fuel consumption cost was Rs 2.09 per Kcal.

Management expects cost pressure associated with the West Asia crisis, costly petcoke, tighter domestic coal availability and higher industrial diesel prices to persist in the near term.

1HFY27 Financial Performance

For 1HFY27, UltraTech Cement reported revenue, EBITDA and PAT growth of 17 per cent, 16 per cent and 18 per cent year on year to Rs 47,940 crore, Rs 8,740 crore and Rs 4,110 crore, respectively. EBITDA per tonne increased 3 per cent year on year to Rs 1,099.

Demand, Pricing and Market Share

Management said cement demand grew around 10 per cent year on year in 2QFY27, compared with UltraTech Cement’s volume growth of 13.8 per cent, implying market-share gains. Capacity utilisation rose to around 71 per cent.

Prices recovered from September 2026, with October spot prices around 5 per cent above the 2QFY27 average. Management expects further price improvement to offset structural cost inflation.

Risks to demand include a weak monsoon affecting agricultural incomes and rural housing demand. Capacity utilisation in the Central and Eastern regions was affected by heavy monsoon conditions.

Capacity Expansion and New Initiatives

UltraTech Cement is evaluating an additional organic capacity-expansion phase beyond 240 mtpa by FY28E, with detailed plans expected before the end of FY27.

The company added 116 MW of renewable capacity and 10 MW of waste-heat-recovery capacity in 2QFY27. Its green-power mix was around 45.4 per cent, and management targets around 85 per cent by FY30.

UltraTech Cement launched its cables and wires business under the UltraVolt brand in September 2026. Of the planned Rs 1,800 crore investment, Rs 1,100 crore had been spent. The company is focused on production ramp-up, product availability, replenishment, credit discipline and secondary-sales tracking.

Earnings Outlook and Valuation

Motilal Oswal forecasts FY26-28 consolidated revenue, EBITDA and PAT CAGR of 13 per cent, 14 per cent and 15 per cent, respectively. It estimates volume CAGR of around 10 per cent and EBITDA per tonne of Rs 1,130 in FY27E and Rs 1,186 in FY28E, compared with Rs 1,103 in FY26.

The target price is Rs 13,220, based on 18x FY28E EV/EBITDA. UltraTech Cement trades at 17x FY27E and 14x FY28E EV/EBITDA.