UltraTech Cement Q3 FY26: Profit Soars 32% on Strong Sales

Introduction

UltraTech Cement Limited, India's largest cement producer, announced a robust financial performance for the third quarter of fiscal year 2026, ending December 31, 2025. The company demonstrated significant year-on-year growth in revenue and profitability, driven by strong sales volumes, improved operational efficiencies, and effective cost management. The results reflect sustained demand from government-led infrastructure projects and a recovering domestic economy, reinforcing UltraTech's market leadership.

Stellar Financial Performance

For Q3 FY26, UltraTech reported consolidated revenues of Rs. 21,506 crores, a substantial 22.5% increase compared to the same period last year. This top-line growth translated into strong profitability. Operating EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) reached Rs. 3,915 crores, marking a 35.3% year-on-year surge. The company's Profit After Tax (PAT) also saw a significant rise of 32% to Rs. 1,792 crores. It is important to note that this PAT figure excludes a one-time exceptional expense of Rs. 88 crores related to obligations under the new Labour Code. Including this charge, the reported net profit stood at Rs. 1,729.4 crores, still representing a healthy 27% YoY growth.

Financial Highlights Q3 FY26 vs Q3 FY25

Volume Growth and Demand Drivers

A key factor behind the strong performance was a significant increase in sales volumes. Consolidated sales volumes grew by 15.0% year-on-year to 38.87 million tonnes. The domestic grey cement segment was a primary contributor, with volumes expanding by 15.4% to 36.37 million tonnes. The company's flagship 'UltraTech' brand outpaced the market, recording a remarkable 22.3% growth. Other segments also performed well, with India Cements contributing a 25.3% volume growth and the Ready Mix Concrete (RMC) business growing by 25% in volume and 26% in revenue to Rs. 1,848 crores.

Operational Efficiency and Cost Management

UltraTech demonstrated effective cost control during the quarter. Logistics costs per tonne declined by 4% year-on-year, aided by a 14 km reduction in lead distance due to market proximity initiatives. Despite global volatility, fuel costs per tonne fell by 2% YoY to Rs. 884/Mt. A significant achievement was the 15% year-on-year decline in power costs per tonne to Rs. 349/Mt. This was largely driven by the company's increasing reliance on green energy, with its green power mix reaching 42.1%, a 34% increase from the previous year. While raw material costs per tonne saw a 6% YoY increase, other costs declined by 7% due to operating leverage and lower maintenance expenses.

Capacity Expansion and Market Leadership

Reinforcing its position as India's leading cement manufacturer, UltraTech commissioned 1.8 mtpa of new domestic grey cement capacity during the quarter. This includes 0.6 mtpa in Dhule, Maharashtra, and 1.2 mtpa in Nathdwara, Rajasthan, bringing its total domestic grey cement capacity to 188.66 mtpa. The company's capacity utilization improved to 77%, up from 72% in the corresponding quarter of the previous year. UltraTech is pursuing further expansion, with plans to add another 22.8 mtpa, aiming for a total capacity of 240.76 mtpa.

Sustainability and ESG Initiatives

UltraTech continues to advance its sustainability agenda. The company's Scope 1 Net CO2 emissions stood at 534 kg CO2/Mt cement for the first nine months of FY26, a 2.0% improvement over FY25. It also increased its use of alternative raw materials and fuel by 11% year-on-year. A notable achievement was the adoption of a first-of-its-kind Group Multisite Certification Model covering management systems for quality, environment, safety, energy, and social accountability, showcasing its leadership in ESG practices.

Balance Sheet and Financial Health

The company's financial position remains strong. Gross debt remained stable at Rs. 23,035 crores, while net debt increased slightly to Rs. 17,929 crores due to ongoing capital expenditure and working capital requirements. The net debt-to-EBITDA ratio improved to 1.08x, indicating a healthy balance sheet that can support future growth ambitions.

Analyst Commentary

Following the results, brokerage firm Dolat Capital maintained a 'Reduce' rating on the stock with a revised target price of Rs. 13,142. While acknowledging the strong performance and projecting healthy growth momentum, the brokerage believes that the current market price already factors in most of the positive developments, limiting potential upside for investors.

Conclusion

UltraTech Cement's Q3 FY26 results highlight its ability to capitalize on favorable market conditions through disciplined execution. The company successfully delivered strong growth in both revenue and profit, supported by robust volume expansion and effective cost optimization, particularly through its green energy initiatives. With a clear roadmap for capacity expansion and a continued focus on sustainability, UltraTech is well-positioned to maintain its growth trajectory and create long-term value for its stakeholders.