Summary
UltraTech Cement Limited - Q3 FY26 Earnings Call Summary Saturday, January 24, 2026 6:00 PM IST
Event Participants
Executives 2 Atul Daga (CFO and Business Head), Kailash C. Jhanwar (Managing Director)
Analysts 11 Amit Kumar Murarka, Andrey Purushottam, Ashish Jain, Girija Ray, Harsh Mittal, Indrajit Agarwal, Jashandeep Singh Chadha, Navin Sahadeo, Pinakin Parekh, Pulkit, Rahul Gupta, Raashi, Ritesh Shah, Shravan Shah, Siddharth Mehrotra
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Capacity Utilization | >90% (Guided) | Guided for Q4 FY26 based on strong demand in trade and non-trade segments. |
| Clinker Conversion Factor | 1.49 | Improved from 1.45; targeting 1.54 by mid-FY27/FY28. |
| Net Debt / EBITDA | 1.08x | Consolidated basis; management expects to reach 0.8x - 0.9x by end of FY26. |
| Lead Distance | 363 km | Reduced from previous levels; target is a 25 km reduction from a 400 km base. |
| Green Power Share | 41% | Increasing toward a target of 60% by FY27/H1 FY28. |
| Premium Products Share | 36% | Contribution to total trade sales volume. |
| Fuel Cost | ₹1.8 per kcal | Remained stable during the quarter; spot pet coke prices at $117-$119/t. |
| Capex (9M FY26) | ₹7,000 - ₹7,200 crores | Full year FY26 spend guided at ₹9,500 - ₹10,000 crores. |
Geographic & Segment Commentary
- North India: Robust demand driven by Punjab’s ₹16,000 crore road initiatives, ₹12,000 crore Delhi Metro corridors, and Uttar Pradesh’s 1,575 km multi-city metro network. Management noted highway projects like the Barabanki-Mustafabad greenfield project are key drivers.
- West India: High-capacity transport projects in Maharashtra including the ₹58,000 crore Uttan-Virar Sea Link and Pune-Chhatrapati Sambhajinagar Expressway (245 km). Gujarat is developing 9 high-speed corridors covering 800 km under PM Gati Shakti.
- South India: Driven by Bangalore’s metro expansion (set to reach 175 km by Dec '27) and Telangana’s ₹10,000 crore highway expansion. Integration of India Cements is ahead of plan with 58% brand conversion achieved.
- East India: Strong road initiatives in West Bengal (₹8,487 crore program) and Bihar’s three major Ganga Road projects worth ₹70,000 crore. Chhattisgarh is completing over 2,000 km of roads under PMGSY-IV.
Company-Specific & Strategic Commentary
- Asset Integration: Brand transition at Kesoram reached 69% and India Cements reached 58% by Dec '25; cost improvement capex of ₹382cr (Kesoram) and ₹601cr (India Cements) is underway to realize P&L benefits by Q4 FY27.
- New Business Lines: The “Cables and Wires” initiative is on schedule for an Oct-Dec 2026 launch, with ₹500 crores in orders placed and ₹197 crores already spent.
- Efficiency Program: Delivered ₹86/t in savings from measurable targets last year; management expects to cross the ₹100/t mark in efficiency improvements during the current financial year.
- Non-Core Divestments: Divested Indonesian coal mining assets; currently negotiating sale of land parcels in Hyderabad and other areas, targeting further realizations of at least ₹500 crores.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Capacity Addition | 8-9 mtpa (Q4 FY26) | To reach ~198-199 mtpa by March 2026. |
| Capacity Addition | 12 mtpa (FY27) | Part of the ongoing phase to reach 235 mtpa by FY28. |
| Volume Demand | 7% - 8% (Long-term) | Management maintains outlook of growing faster than the industry average. |
| EBITDA/Ton | Sequential Increase (Q4 FY26) | Driven by higher capacity utilization (>90%), stable fuel costs, and price hikes. |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost Inflation | Management noted potential risks from pet coke/coal price volatility, rupee depreciation, and the new labor code impact. Mitigation involves passing costs through price hikes (currently ₹6-8/bag higher). |
| Legal/Regulatory | India Cements assets are currently involved in an ED case with attached properties in Hyderabad. Management is seeking legal opinions before deciding on full merger or further asset restructuring. |
| Realization Pressure | While overall demand is high, the shift toward large infrastructure projects (non-trade) can pressure blended realizations. Management aims to mitigate this through RMC expansion and institutional “advocacy” for blended cement. |
Q&A Highlights
Pricing Dynamics
- Question: What is the current pricing trend versus Q3? (Raashi, Citigroup)
- Answer: Naked cement realization is up ₹3-4/bag, translating to a market price increase of ₹6-8/bag. UltraTech is currently in a “sold out” position, allowing it to prioritize higher-paying customers (Atul Daga).
India Cements Synergies
- Question: Is the significant drop in freight costs at India Cements a new normal? (Navin Sahadeo, ICICI Securities)
- Answer: It is a combination of brand transition and better logistics footprints; costs are expected to go down further as brand conversion completes (Atul Daga).
Capacity Phasing
- Question: What is the timeline for adding the announced 22 million tons? (Satyadeep Jain, Ambit)
- Answer: 12 million tons will be added in FY27, with the balance in FY28. Orders are already placed, and delays are expected to be no more than a quarter if they occur (Atul Daga).
Demand Mix
- Question: Will infra demand lead to a shift from PPC to OPC? (Ashish Jain, Macquarie)
- Answer: Advocacy is actually moving institutional buyers toward blended cement. UltraTech’s RMC business (3% of volumes) is growing rapidly to service this institutional demand (Atul Daga).
Key Takeaway
UltraTech Cement delivered a robust Q3 FY26, characterized by strong volume growth and efficient cost management despite subdued pricing. The company successfully integrated acquisitions, with brand conversion at Kesoram and India Cements exceeding 55-60%, ahead of schedule. Operationally, the clinker conversion factor improved to 1.49 and lead distances reduced to 363 km, contributing to over ₹100/t in targeted efficiency gains. Strategic expansion remains on track to reach ~199 mtpa by the end of FY26, funded entirely through internal accruals while maintaining a healthy net debt/EBITDA of 1.08x. Looking ahead, management expects Q4 FY26 to see capacity utilization exceed 90% and EBITDA margins to improve sequentially, supported by a ₹6-8/bag price hike and a massive infrastructure pipeline across India. The company remains positioned to grow faster than the industry average as it targets a consolidated capacity of 235 mtpa by FY28.
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