Fitch Ratings has affirmed UltraTech Cement’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘BBB-‘ with a stable outlook. The rating also applies to the company’s USD 400 million senior unsecured notes due in 2031. The affirmation reflects UltraTech’s strong market position, cost-efficient operations, and expectations of modest leverage.
Fitch Ratings Affirmation
Fitch Ratings has affirmed UltraTech Cement Limited’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘BBB-‘. The outlook remains stable, signaling confidence in the company’s financial health and operational efficiency. This rating action was announced on November 18, 2025.
Key Rating Drivers
The ratings reflect Fitch’s expectation of a modest leverage profile, with EBITDA net leverage sustained around 1.5x. UltraTech’s leading market position in India and potential for long-term demand growth also contributed positively to the rating. Fitch anticipates UltraTech’s leverage to remain well below the negative sensitivity of 2.5x, with EBITDA growth offsetting increased capital expenditure and net debt.
Volume Growth and Margins
Fitch forecasts UltraTech’s cement sales volume to grow at a CAGR of 10% over FY26-FY28, outpacing the expected industry growth of 7%-8%. This growth is attributed to UltraTech’s strong brand and cost advantages, along with investments in capacity addition. The company’s Fitch-adjusted unit EBITDA margin is expected to improve to above INR1,000 per tonne (t) in FY26 (FY25: INR906/t). The company is transitioning the volume from recent acquisitions, which should improve UltraTech’s average price realisation.
Capex and Expansion
UltraTech intends to expand its grey cement capacity in India by around 25% to 235 million tonnes per annum (mtpa) by FYE28, compared with 187mtpa as of September 2025. The company expects to spend around INR100 billion on the expansion, focused on northern India. UltraTech is also establishing a plant to manufacture wires and cables, expected to cost around INR18 billion, with commissioning planned by December 2026.
Key Assumptions
Fitch’s key assumptions within their rating case for UltraTech include:
- UltraTech’s revenue increasing at a CAGR of 12% over FY26-FY28
- An average EBITDA margin of 18% over FY26-FY28 (FY25: 16%)
- Cumulative capex of INR345 billion over FY26-FY28
Rating Sensitivities
Factors that could lead to a negative rating action/downgrade include a worsening market position, EBITDA net leverage sustained above 2.5x, or weakening of Grasim’s consolidated credit profile. Conversely, factors that could lead to a positive rating action/upgrade include EBITDA net leverage below 1.5x on a sustained basis and an improved business mix.
Source: BSE
