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UltraTech Cement reported a strong rise in its first-quarter financial performance, supported by higher cement demand, increased sales volumes and operational efficiencies despite elevated fuel costs. The company also announced a larger capacity expansion plan for FY2028, reflecting confidence in long-term demand. While rising petcoke and coal prices continued to put pressure on margins, improved operating performance and its large-scale operations helped offset the impact. Analysts believe pricing remains the key challenge for the cement industry even as demand continues to stay healthy.
India's largest cement manufacturer by production capacity, UltraTech Cement, reported a nearly 17% year-on-year increase in consolidated net profit for the first quarter, supported by strong demand, higher sales volumes and operational efficiencies despite continued pressure from rising fuel costs.
The company also announced plans to significantly accelerate its expansion programme. It expects to add 29.8 million tonnes per annum (MTPA) of cement production capacity in FY2028, compared to its planned addition of 15.9 MTPA in FY2027. The expansion is part of UltraTech's long-term strategy to strengthen its manufacturing footprint and meet growing cement demand across India.
Industry analysts said the company's scale, extensive distribution network and efficient cost structure enabled it to manage higher fuel expenses better than many smaller competitors. Increased demand and strong sales volumes also helped support its financial performance during the quarter.
Saurabh Jain, Head of Retail Equities at SMC Global, said UltraTech's unmatched scale, wider distribution network and efficient cost structure should allow the company to influence market dynamics more effectively than its peers over the medium to long term.
He further noted that although several cement manufacturers are expanding capacity, the industry's ability to pass on higher costs through price increases or improve realisations could remain limited. According to him, pricing continues to be a bigger concern for the sector than demand.
Fuel costs remained elevated during the quarter as prices of petcoke and coal, which are key inputs for cement manufacturing, stayed high. Although cement producers increased prices by around 2.5% to 3% during the period, much of the benefit was offset by higher input costs.
UltraTech's operating EBITDA (earnings before interest, taxes, depreciation and amortisation) improved by INR 16 per tonne year-on-year to INR 1,214 per tonne from INR 1,198 per tonne in the corresponding period last year.
Jain said the company's ongoing operational efficiency measures should help maintain EBITDA per tonne at current levels despite fluctuations in fuel costs. He added that any improvement in cement prices could further strengthen profitability.
Revenue from operations increased around 16% year-on-year to INR 246.48 billion (USD 2.56 billion), while domestic sales volumes rose 13.1% to 39.2 million metric tonnes during the quarter, indicating sustained demand across key markets.
UltraTech has continued to expand aggressively over the past few years through both organic capacity additions and acquisitions, reinforcing its position as India's largest cement producer. The company has consistently focused on improving operational efficiency, increasing production capacity and strengthening its market presence as infrastructure development, housing projects and public capital expenditure continue to drive long-term cement demand in the country.
Following the earnings announcement, UltraTech Cement's shares closed 1.5% higher at INR 11,903.
Source Reuters
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