UltraTech Cement gets target upgrades on solid Q1 show, integration wins

UltraTech Cement's consolidated net sales rose 13 per cent year-on-year (Y-o-Y) to ₹21,040 crore, up from ₹18,626 crore in the corresponding period last year.

Brokerage on UltraTech Cement: Cement giant UltraTech Cement delivered a strong performance in the first quarter of FY26 (Q1FY26), with solid top-line growth, improved margins, and successful integration of acquired assets.

 

Consolidated net sales rose 13 per cent year-on-year (Y-o-Y) to ₹21,040 crore, up from ₹18,626 crore in the corresponding period last year. Profit before interest, depreciation, and tax stood at ₹4,591 crore, marking a 44 per cent surge, while profit after tax jumped 49 per cent Y-o-Y to ₹2,226 crore, driven by strong volume growth and cost efficiencies.

 

The company’s consolidated sales volumes grew 9.7 per cent Y-o-Y to 36.83 million metric tonnes (mn mt), aided by the acquisitions of The India Cements Limited and the cement business of Kesoram Industries. Notably, energy costs fell 12 per cent Y-o-Y due to softer fuel prices, although raw material costs rose marginally by 2 per cent.

 

India Cements, now a subsidiary of UltraTech since December 25, 2024, has seen a turnaround under UltraTech’s operational oversight. With a capacity of 14.45 mn mtpa, India Cements posted an Ebitda of ₹92 crore in Q1FY26, compared to a loss of ₹9 crore in the same quarter last year.

 

UltraTech’s debottlenecking initiatives also added 0.3 mn mtpa capacity in the high-demand northern region. A two-year capex plan is in the works to further elevate these assets to UltraTech’s operating standards. 

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UltraTech also ramped up its capacity during the quarter, adding 3.5 mn mtpa to its grey cement capacity and taking its total installed capacity to 192.26 mn mtpa.

 

The company remains focused on increasing production capabilities to meet growing cement demand across the country. Several debottlenecking and efficiency enhancement initiatives have been executed at different locations, highlighting UltraTech’s operational agility.

 

Brokerages have responded positively to the quarterly performance. Nuvama noted that UltraTech reported about 10 per cent Y-o-Y volume growth (domestic grey cement volume growth of approximately 9 per cent). Domestic operating Ebitda per tonne (excluding India Cements) stood at ₹1,248, while blended Ebitda per tonne was ₹1,197, aided by steady pricing in what is traditionally a weak quarter.

 

Thus, Nuvama expects double-digit volume growth in FY26 and sees UltraTech reaching a domestic capacity of nearly 212 million mt by end-FY27. Reflecting this optimism, it has raised its target EV/Ebitda multiple from 18x to 19x and revised the target price to ₹13,628 (₹11,859 earlier), maintaining a ‘Hold’ rating.

 

Motilal Oswal, on the other hand, maintained its bullish stance, calling UltraTech its preferred pick in the cement sector. It highlighted that Ebitda grew 46 per cent Y-o-Y to ₹4,410 crore, and Ebitda per tonne improved 33 per cent Y-o-Y to ₹1,197.

 

Operating profit margins expanded 470 basis points (bps) Y-o-Y to about 21 per cent. Adjusted PAT also saw a robust 44 per cent Y-o-Y increase. The brokerage attributed the strong demand environment to government-led infrastructure activity and an anticipated recovery in rural and urban housing sectors. It reiterated a ‘Buy’ rating with a target price of ₹14,600, valuing the company at 20x FY27E EV/Ebitda.

 

Motilal Oswal also underlined the successful integration of India Cements and Kesoram assets, as well as UltraTech’s disciplined approach to capacity expansions and operational efficiencies. The company is expected to witness a 14 per cent CAGR in revenue, 25 per cent in Ebitda, and 30 per cent in PAT over FY25–FY28. Net debt is projected to decline considerably to ₹3,000 crore by FY28, with net debt-to-Ebitda expected to improve to 0.1x from 1.2x currently.

 

According to reports, Antique Stock Broking also maintained a positive outlook, reaffirming its ‘Buy’ rating and raising the target price to ₹13,750 from ₹12,800. The brokerage noted that Q1FY26 performance was in line with expectations, and stressed upon UltraTech’s continued focus on boosting profitability of acquired assets. Management commentary suggests that demand recovery and volume growth are expected to outpace industry averages.

 

Antique also highlighted that the profitability of Kesoram and India Cements is expected to align with the broader southern market by FY27–28, aided by ongoing cost efficiency measures. It raised its FY26E Ebitda estimate by 3 per cent on account of better realisations, while leaving FY27E largely unchanged.

 

Moreover, Morgan Stanley reportedly maintained its ‘Overweight’ stance on the company with a target price of ₹14,000.