UltraTech Cement: Building a Stronger Foundation in Q2 FY26

UltraTech Cement Limited, a titan in the Indian cement industry, delivered a robust performance in the second quarter of fiscal year 2026, showcasing resilience and strategic foresight amidst a dynamic market. The company reported a consolidated revenue of INR 19,371 crore, marking a significant 21.3% growth year-on-year. This impressive top-line expansion translated into a substantial boost in profitability, with Net Profit After Tax (PAT) soaring by 75% to INR 1,232 crore. The quarter's results underscore UltraTech's ability to drive volume growth, integrate acquisitions effectively, and maintain operational discipline.

The strong financial showing was underpinned by solid operational metrics. Domestic grey cement volume grew by 7.1% year-on-year, while the UltraTech brand itself witnessed an even more impressive 13.2% growth in domestic volumes. This growth was significantly aided by the swift brand conversion of acquired assets: India Cements saw 31% of its sales converted to UltraTech, and Kesoram assets achieved a 55% conversion rate. The Ready Mix Concrete (RMC) segment continued its upward trajectory, with volumes increasing by 26% and revenue by 30% year-on-year, highlighting the company's diversified growth engines. The company's extensive retail network, comprising 5,084 UBS outlets, played a crucial role, contributing 20.5% to domestic grey cement sales volume.

Strategic Expansion and Operational Excellence

UltraTech's strategic vision for growth is clearly articulated through its aggressive capacity expansion plans. The company is on track to add 14.1 Mtpa in FY26 and another 15.1 Mtpa in FY27 through a mix of debottlenecking, brownfield, and greenfield projects across key regions. This expansion is designed to solidify its market leadership and meet the anticipated surge in demand from government infrastructure projects and affordable housing initiatives. Management reiterated its goal to reach 240-245 million tons of capacity by fiscal year 2029, with 200 million tons expected by the end of the current financial year.

Operational efficiency remains a cornerstone of UltraTech's strategy. The clinker conversion ratio improved to 1.48, reflecting optimized production processes. The company's commitment to sustainability is evident in its increasing green power mix, which reached 41.6% in Q2 FY26, a 38% year-on-year increase. UltraTech also achieved a 5.6x water positive status and saw a 1.8% reduction in Scope 1 Net CO2 Emissions. A significant milestone was the commissioning of India's first on-site 7.5MW hybrid Round-The-Clock (RTC) renewable energy project, integrating solar, wind, and battery storage to ensure uninterrupted power for cement manufacturing. Furthermore, a strategic partnership with CONCOR for bulk cement movement in tank containers is set to revolutionize logistics, reduce costs, and promote green transportation.

Navigating Costs and Future Outlook

While the quarter showcased strong growth, UltraTech also managed certain cost pressures. Higher maintenance costs, primarily due to increased kiln shutdowns, and elevated advertising expenditure contributed to a temporary rise in per-ton costs. Staff costs also increased due to annual increments and bonuses. However, management expressed confidence that some of these impacts would normalize in the coming quarters. The reduction in the Clean Energy Cess levy on coal, following GST 2, is expected to be a long-term benefit, given UltraTech's balanced fuel portfolio of coal and pet coke.

Looking ahead, UltraTech is well-positioned to capitalize on India's robust economic growth and infrastructure push. The management anticipates continued strong demand from rural markets, driven by favorable monsoons and government support prices. The integration of India Cements and Kesoram assets, coupled with planned capex for efficiency and capacity enhancement, is expected to significantly boost their profitability, with India Cements projected to achieve INR 1,000 EBITDA per ton and Kesoram targeting INR 1,000-1,200 EBITDA per ton by June '26. UltraTech Cement Limited's Q2 FY26 performance reflects a company that is not just growing, but growing strategically and sustainably, laying a solid foundation for future success.