UltraTech Cement’s Q2 FY27 earnings call revealed a robust performance with strong volume growth of 13.8%, outpacing the industry average. The company highlighted stable pan-India pricing, significant cost management efforts, and progress on its capacity expansion plans, including a new greenfield plant in the Southern markets. Management expressed confidence in continued demand and profitability improvements in the upcoming quarters.
UltraTech Cement Reports Strong Q2 FY27 Performance
During its Q2 FY27 earnings conference call, UltraTech Cement Limited shared positive updates on its operational and financial performance. The company reported a significant volume growth of 13.8% for the quarter, which is comfortably ahead of the industry estimate of approximately 10% year-on-year growth. This expansion indicates a continuous increase in UltraTech’s market presence across various regions.
Key Performance Indicators and Market Dynamics
Pan-India average trade prices for Q2 FY27 remained stable, largely in line with Q1, with a marginal decrease of 1%-1.5% primarily due to a softer August. However, prices firmed up considerably in September, with trade prices rising by an estimated 7-10% month-on-month, and non-trade prices seeing even higher increases. The company exited September with trade prices at least 3% above the Q1 average. This trend is expected to continue, with prices for October remaining high and further improvements anticipated in the near future. UltraTech achieved an improved operating performance, higher capacity utilization on a larger base, stable realizations, enhanced efficiency, and a 21% increase in net profit.
Regional Performance and Demand Drivers
The West region saw steady prices through July and August, stepping up in September with Mumbai showing strong growth of 3-4% per bag for both bag and bulk. Eastern markets, despite initial rain disruptions, experienced price catch-up in early October. The Southern markets demonstrated the strongest momentum in prices, volume, and capacity utilization, with the company noting significant transformation in the region. North markets grew in high double digits, with an increase of over 20%, while Southern markets saw growth of 15-20%. Capacity utilization stood at 71%, an improvement from 66% in the previous year, with North and South markets exceeding 70% utilization. Central and East markets were around 60% due to prolonged monsoons. Demand drivers include a resilient housing market supported by fewer rain-lost days and strong public capex, particularly from the Central government. New project announcements, including infrastructure and industrial parks, are expected to boost demand further.
Capacity Expansion and New Business Ventures
UltraTech commissioned 4.6 million tons of capacity in September, taking its domestic cement capacity to 204.7 million tons. This includes 3.6 million tons of greenfield capacity at Petnikota, Andhra Pradesh, and 1 million tons of debottlenecking at other units. The company also added 116 megawatts of renewable power and 10 megawatts of waste heat recovery. Furthermore, UltraTech launched its Wires and Cables business under the brand Ultravolt on September 3rd, with an investment of INR1,800 crores, having already spent INR1,100 crores. The company aims to stabilize this business by focusing on reliable replenishment and credit discipline.
Outlook and Cost Management
Looking ahead, UltraTech expects industry growth to remain strong, with expectations of growing even stronger, supported by capacity additions and market reach. The company anticipates a decent reversal on fixed costs due to operating leverage kicking in. While cost pressures from West Asia crisis and increased fuel prices are a challenge, UltraTech is focusing on price discipline, product mix optimization, and cost reduction across fuel sourcing, power, and logistics. The company is well-capitalized to support its growth plans, with a strategic focus on organic growth and building its businesses structurally.
Source: BSE
