Cement pricing disappointed in the December quarter (Q3FY26), but UltraTech Cement Ltd still delivered a comfortable earnings beat. Consolidated Ebitda rose 27% quarter-on-quarter to ₹3,916 crore, beating consensus estimates, even as grey cement realizations fell about 3%. Strong volume growth and lower costs lifted Ebitda per tonne to ₹1,007 from ₹914 last quarter.
The driver was scale and cost discipline. Cement volumes rose 15% sequentially to 38.9 million tonnes, including contributions from India Cements and Kesoram, signalling market share gains. At the same time, UltraTech is becoming less sensitive to pricing swings as costs decline. Of the planned ₹300-350 per tonne savings over time, about ₹86 per tonne was delivered in FY25, with cumulative savings by FY26 expected to cross ₹100 per tonne, providing a cushion against uneven industry pricing.
Pricing, meanwhile, has begun to firm. January saw hikes of ₹6-8 per bag, translating into a net realization uplift of roughly ₹3-4 per bag as the peak season approaches.
Capacity expansion remains on track. UltraTech is set to add 8-9 million tonnes per annum (mtpa) in Q4 and another 12 mtpa in FY27, taking total capacity to around 235 mt by FY28. Capex guidance for FY26 is ₹10,000 crore. Net debt-to-Ebitda stood at about 1.08x at December-end, with management indicating this should ease to around 0.8–0.9x by March-end.
The next test is integration. Acquired assets, India Cements and Kesoram Industries, still trail UltraTech’s core profitability. Management expects margins at both assets to improve meaningfully over FY27-28, driven by cost actions and the completion of brand transition by June, alongside improving pricing in the southern market. If this plays out, consolidated margins could expand even without a broad-based pricing recovery.
Investors will closely monitor regional competition and the pace of improvement at acquired units.
“The resurgence of competitive intensity (potential impact of about 185 mtpa capacity addition over FY26-28E) restricts the potential for a higher multiple,” said ICICI Securities. It values UltraTech stock at 18x FY27 estimated EV/Ebitda and ‘Hold’ rating with unchanged target price of ₹12,300.
What works in UltraTech’s favour is clear: falling costs, improving asset quality and visible volume growth. For investors, the question is no longer when cement prices recover, but whether UltraTech can keep converting scale into earnings. If it does, any pricing recovery would only add upside.