UltraTech Cement Q3 Preview: Volumes to Drive 25% PAT Growth

Strong Quarter Expected for Cement Major

UltraTech Cement, India's largest cement manufacturer, is anticipated to report a robust financial performance for the third quarter of fiscal year 2026. Market analysts and brokerage firms are forecasting significant growth, driven primarily by strong sales volumes, improved operational efficiencies, and moderating input costs. Projections indicate a potential quarter-on-quarter (QoQ) increase in Profit After Tax (PAT) of up to 25%, with revenue expected to climb by as much as 11%. This positive outlook follows a solid performance in the preceding quarter and underscores the company's strong market position and strategic initiatives.

Volume Growth as the Primary Catalyst

The primary driver behind the optimistic Q3 forecast is a substantial increase in sales volumes. Brokerages estimate a year-on-year (YoY) volume growth in the range of 15% to 21%. This surge is attributed to several factors, including the successful consolidation of recently acquired assets from India Cements and Kesoram Industries, the ramp-up of new production capacities, and sustained demand from both infrastructure and rural housing sectors. The company has been strategically expanding its footprint, particularly in the northern and western markets, which is now translating into higher sales figures and increased market share.

Financial Projections and Profitability

Improved profitability is another key theme for the upcoming results. The expected 25% QoQ jump in PAT is supported by better cost management and higher capacity utilization. After a period of volatility, key input costs such as coal and pet coke have seen some easing, providing a cushion for margins. The company's focus on enhancing its green power mix and other operational efficiencies is also expected to contribute positively to the bottom line. The projected 11% QoQ revenue growth reflects a combination of higher volumes and stable to firm cement prices across key regions.

Context from Recent Performance

UltraTech's strong Q3 expectations are built on the momentum from its Q2 FY26 performance. During the second quarter, the company achieved sales of over 31 million tons despite challenges posed by heavy monsoons. It reported an overall sales volume growth of 6.8%, with its flagship brand growing 13.2% YoY. The operational performance of its assets was noteworthy, with existing capacities delivering an EBITDA of ₹966 per metric ton, while the newly acquired Kesoram and India Cements assets generated EBITDA of ₹755 and ₹386 per ton, respectively, indicating a steady integration process.

Strategic Expansion and Integration Update

Looking ahead, UltraTech is committed to a significant expansion strategy. The company has announced plans to add 22.8 million tons per annum (MTPA) of new capacity by FY29, with a strategic focus on the northern (18 MTPA) and western (4.8 MTPA) markets. This expansion is aimed at meeting the rising long-term demand driven by national infrastructure projects and urban development. Simultaneously, the integration of its recent major acquisitions is progressing well. As of the last update, the brand conversion for India Cements assets was 31% complete, while Kesoram's brand transition had reached the 55% mark, with a target for full completion by June 2026.

Broader Sector Outlook

The Indian cement sector is navigating a phase of capacity expansion and pricing discipline. While increased capacity could exert pressure on prices, the long-term demand outlook remains robust, supported by government spending on infrastructure. A potential tailwind for the sector is the anticipated reduction in the Goods and Services Tax (GST) on cement from 28% to 18%. Such a move would lower construction costs, potentially stimulating demand across the real estate and infrastructure segments and benefiting major players like UltraTech.

Analyst Commentary

Analysts remain largely bullish on UltraTech Cement, citing its market leadership, strong balance sheet, and effective growth strategy. Several brokerage firms, including Prabhudas Lilladher, Motilal Oswal, and Deven Choksey, have maintained 'buy' or 'accumulate' ratings on the stock. Target prices from various reports in late 2025 ranged from ₹13,425 to as high as ₹15,200, reflecting confidence in the company's ability to deliver sustained growth and shareholder value.

Conclusion

UltraTech Cement is well-positioned for a strong earnings report in Q3 FY26. The combination of robust volume growth, improving profitability, and strategic capacity expansion paints a positive picture. Investors and market watchers will be keenly awaiting the official earnings announcement and the management's commentary on future demand trends, the progress of its expansion projects, and the outlook for the remainder of the fiscal year.