Moody’s Ratings has affirmed UltraTech Cement’s Baa3 issuer rating and Baa3 senior unsecured rating, citing the company’s leading market position in India and strong balance sheet. With ongoing expansions and acquisitions, UltraTech aims to increase its production capacity to 218 million tons per annum by March 2027. Moody’s maintains a stable outlook on all ratings, reflecting expectations of continued growth and profitability.
Ratings Affirmation Overview
Moody’s Ratings affirmed UltraTech Cement Limited’s Baa3 issuer rating and its Baa3 senior unsecured rating. The stable outlook reflects UltraTech’s strong position as India’s largest cement producer, supported by a strong balance sheet and favorable industry conditions driving cement demand and earnings growth.
Expansion and Production Capacity
UltraTech added 16 million tons of cement capacity through greenfield expansions and another 26 million tons via the acquisition of India Cements Limited (ICL) and Kesoram Industries during the fiscal year ended March 31, 2025 (FY24-25). The company aims to expand its production capacity to 218 million tons per annum (mtpa) by March 2027, reinforcing its market leadership.
Financial Expectations
UltraTech’s revenues are expected to grow by 13% to INR850 billion ($9.8 billion) in FY25-26, with subsequent annual growth rates of 7%-8% over the next two years. This revenue increase is supported by contributions from ICL and sustained demand for cement within India. EBITDA margins are projected to improve to around 18%-19% over the next 1-2 years. UltraTech targets an EBITDA increase of INR300/ton through cost reductions.
Capital Spending and Leverage
Annual capital spending will remain around INR105 billion, with shareholder payments at INR22-25 billion. Borrowings are expected to increase to around INR260 billion by March 2027. UltraTech’s leverage, measured by Moody’s adjusted gross debt/EBITDA, will remain around 1.6x over the next 1-2 years.
Liquidity Considerations
Moody’s assesses UltraTech’s liquidity as adequate over the next 12-18 months, influenced by higher capital spending. The company can adjust its capital spending if growth slows or profitability weakens.
Source: BSE
