UltraTech Cement Q3 FY26: Profit Soars 27% to ₹1,729 Crore

Introduction

UltraTech Cement, India's largest cement producer, announced a robust financial performance for the third quarter of fiscal year 2026, reinforcing a positive outlook for the broader Indian cement sector. The company reported a significant year-on-year increase in profit and revenue, comfortably surpassing analyst expectations. This strong showing is attributed to healthy sales volumes, improved operational efficiencies, and sustained demand from the housing and infrastructure segments. The results prompted a positive reaction in the stock market, highlighting investor confidence in the company's growth trajectory and market leadership.

Stellar Financial Performance in Q3

For the quarter ending December 31, 2025, UltraTech Cement posted a consolidated net profit of ₹1,729.4 crore, a substantial 27% increase from the same period in the previous year. This figure exceeded the consensus market estimate of ₹1,526 crore. The company's top line also demonstrated strong growth, with revenue from operations climbing 23% year-on-year to reach ₹21,830 crore. This performance was largely driven by a significant uptick in demand, which translated into a 15% year-on-year rise in sales volumes to 38.87 million tonnes. The company's focus on cost management and operational leverage was evident in its improved profitability metrics.

Operational Efficiency and Profitability

The company's operational earnings before interest, tax, depreciation, and amortisation (EBITDA) per metric tonne saw a notable improvement, increasing by ₹140 year-on-year to ₹1,051. This enhancement in profitability per unit reflects successful cost control measures, particularly in logistics and energy consumption. The company has been actively investing in green energy, which has helped lower power costs. Furthermore, the integration of recently acquired assets, such as Kesoram Cement, is progressing well, contributing to better operational synergies and efficiencies across its network. These factors combined to strengthen margins despite a competitive market environment.

Key Financial Highlights for Q3 FY26

Aggressive Expansion on the Horizon

UltraTech Cement is pursuing an aggressive capacity expansion strategy to meet anticipated demand growth of 7-8% in FY26-27. The company has laid out a clear roadmap, planning to add approximately 8 million tonnes of capacity in the fourth quarter of FY26 and another 12 million tonnes in FY27. The goal is to increase its total domestic grey cement capacity to 212.2 MTPA by FY27. Looking further ahead, an investment of ₹10,255 crore announced in October 2025 is set to fund an additional 22.8 MTPA, pushing total capacity towards 240.76 MTPA from FY28. The company has committed a total capital expenditure of ₹32,400 crore over the next three years, which will be funded primarily through internal accruals, underscoring its strong financial health.

Market Reaction and Stock Performance

Investors responded positively to the strong quarterly report. On January 27, 2026, following the announcement, UltraTech Cement's stock reached an intraday high of ₹12,829.40 on the BSE. The share price maintained its gains throughout the trading session, reflecting the market's approval of the company's performance and future outlook. The results provided a clear signal of the company's ability to leverage its scale and pricing power effectively.

Divergent Analyst Views on Valuation

While the performance was widely praised, analyst opinions on the stock's future potential are mixed, primarily due to its current valuation. Elara Capital reiterated an 'Accumulate' rating, raising its target price to ₹14,553, citing the company's strong position to outperform the industry. Similarly, Choice Institutional Equities maintained a 'Buy' rating with a higher target of ₹15,210, emphasizing the aggressive expansion plans. However, Dolat Capital issued a 'Reduce' rating with a target of ₹13,142. Their rationale is that the stock's high P/E ratio, which ranges from 48.5x to 56.8x, already factors in the positive outlook, potentially limiting further upside.

Sector Outlook and Potential Risks

The Indian cement sector is expected to see its profit pool grow by over 20% for the second consecutive year in 2026. This optimism is fueled by a revival in housing, sustained government spending on infrastructure, and a potential recovery in private capital expenditure. However, the sector is not without risks. Key challenges include the possibility of sub-par demand if economic conditions change, weak cement prices due to increased competition, and any sharp, unexpected increases in fuel and logistics costs.

Conclusion

UltraTech Cement's Q3 FY26 results have solidified its position as a leader in the Indian cement industry. The company delivered strong growth in both revenue and profit, backed by robust operational performance and strategic cost management. Its ambitious expansion plans signal confidence in long-term demand. While the strong performance is undeniable, investors will need to weigh the company's solid fundamentals against a valuation that many analysts consider to be elevated. The key forward-looking indicator will be the company's ability to execute its expansion plans while maintaining margin discipline in a dynamic market.