UltraTech Cement Q4FY26: Profit up 20%, shares dip

Stock slips despite a profit beat

UltraTech Cement shares slipped more than 1% to an intraday low of Rs 11,880 on the BSE on Tuesday, even as the company reported a stronger March-quarter performance. The market move came after UltraTech posted a 20% year-on-year rise in consolidated net profit for the January to March 2026 quarter. The company’s consolidated net profit stood at Rs 2,983 crore for Q4FY26. Revenue from operations rose 12% YoY to Rs 25,799 crore for the same quarter. Brokerages largely reiterated positive views on the stock, but some trimmed assumptions and pointed to near-term cost risks.

Q4FY26 numbers in focus

UltraTech’s Q4FY26 net profit of Rs 2,983 crore was also reported as 29.83 billion rupees in estimates tracking, and it exceeded the analyst consensus of 28.1 billion rupees compiled by LSEG. The quarter is seasonally important for cement makers because construction activity typically improves with favourable weather. UltraTech said it achieved the “highest ever sales volume” during the quarter. Grey cement sales volumes for India reached 42.41 million tonnes, up 9.3% year-on-year. Capacity utilisation increased to 89%, which the company attributed to robust demand across housing, infrastructure, and commercial construction.

Margins and costs: the key debate

Operating profit margin dropped to 20% from 22%, with reports pointing to weaker cement prices in southern and eastern regions as a key headwind. Input costs were mixed across the quarter. Raw material costs increased 15.4% year-on-year. Fuel and freight expenses rose about 9% each. Total expenses were reported at Rs 21,894 crore for the quarter. Analysts also flagged that cement makers could face higher operating costs in coming quarters due to fuel costs and packing bag prices.

Volumes, demand and capacity utilisation

Demand trends were supportive during the quarter, with HDFC Securities analysts noting India’s cement demand increased 6% to 7% in the first quarter of the year, driven by strong growth between January and February. UltraTech’s sales volume growth of about 9% helped revenue growth. Reuters also reported that the company gained market share, helped by better capacity usage and expansion versus competitors. Management commentary highlighted demand across housing, infrastructure and commercial construction as the key volume drivers.

Special dividend and FY26 milestones

UltraTech declared a special dividend and linked it to FY26 milestones. It said consolidated profit after tax (PAT) crossed Rs 8,000 crore for the first time in its history. Domestic grey cement capacity moved past 200 MTPA. Operating cash flows rose 50% year-on-year to Rs 14,398 crore, which the company described as the strongest in its history. UltraTech also said FY26 operating cash flow is sufficient to fund ongoing capital expenditure plans as well as the dividend payout, without affecting financial stability or future growth commitments.

Energy strategy and geopolitics in the backdrop

The company pointed to energy and sourcing measures to manage volatility. Energy costs declined 3% year-on-year, supported by a higher green power mix, which increased to 43% of total power consumption from 34.4% in the preceding year. UltraTech also cited an expanded alternative fuel and raw material (AFR) mix and improved conversion ratios. Imported fuel costs averaged USD 122 per tonne in Q4FY26 and were broadly stable year-on-year, while total costs per tonne declined 2% year-on-year. The company also noted that the West Asia conflict put upward pressure on fuel prices, packaging materials, diesel, and ocean freight, but said procurement strategy and diversified sourcing helped mitigate the impact.

Brokerages: Buy calls stay, targets move

Sell-side commentary stayed constructive after the results, with most firms reiterating Buy ratings but adjusting targets based on updated assumptions.

Goldman Sachs maintained a Buy rating but cut its target price to Rs 13,230 from Rs 13,640, implying a 10.5% upside from then-current levels. It highlighted a strong March quarter with EBITDA per tonne at Rs 1,167, ahead of estimates, while expecting near-term margin pressure from higher energy costs. Goldman also expects EBITDA CAGR of around 14% over the next two years.

Citi maintained a Buy rating and raised its target price to Rs 14,750 from Rs 14,350. It said EBITDA was above its estimates, supported by volumes, brand transition benefits and other revenues. Citi highlighted that sequential improvement in EBITDA per tonne was driven by 2% quarter-on-quarter higher realisations, gains from brand transition and a marginal decline in costs. It also noted the stock is trading at an EV/tonne of $160 versus a historical peak of $120.

Nomura retained a Buy rating with a target price of Rs 13,900 and said the earnings surprise was largely driven by better realisations. It reported UltraTech posted unitary EBITDA of Rs 1,250 per tonne, up more than Rs 130 per tonne quarter-on-quarter. Nomura also noted grey cement volumes rose 9% year-on-year to 42.5 million tonnes, slightly below its expectation of 10% growth, and said blended realisations increased 3% quarter-on-quarter.

Motilal Oswal retained a Buy rating with a target price of Rs 13,800, implying a potential upside of 15%. It attributed the quarter’s outperformance to stronger cost savings and said UltraTech believes cost pressures arising from the West Asia conflict remain manageable in the near term through operational levers and partial benefit from price hikes already taken. Motilal expects consolidated revenue, EBITDA and PAT CAGR of 13%, 15% and 18%, respectively, over FY26 to FY28, and projected consolidated volume CAGR of around 10%.

Nuvama maintained a Buy rating and revised its target price to Rs 14,502 from Rs 14,461. It said management has achieved cost reductions of Rs 185 per tonne so far against a medium-term target of Rs 250 to Rs 300 per tonne. Nuvama added that profitability could see some impact in Q2FY27, but expects UltraTech to outperform the industry due to long-term supply contracts that support lower costs.

Key metrics snapshot

What investors are watching next

The result reinforced UltraTech’s scale advantage, with high utilisation and volume growth supporting earnings, while pricing and energy costs remain the key swing factors for margins. Brokerages broadly stayed positive on expansion, brand transition gains and cost programmes, but repeatedly highlighted fuel and energy as near-term variables. Any further movement in petcoke, diesel and freight costs could influence quarterly profitability, especially if regional pricing remains uneven. UltraTech’s commentary that operating cash flows can fund capex and dividends without compromising financial stability will also be tracked alongside execution on cost optimisation.

Conclusion

UltraTech Cement’s Q4FY26 performance delivered a clear earnings beat, led by higher volumes, strong utilisation and improved realisations, even as margins moderated. The stock’s dip to Rs 11,880 on the day highlighted investor sensitivity to near-term cost pressure and expectations already priced in. Brokerages largely retained Buy ratings, with target prices ranging from Rs 13,230 to Rs 14,750 in the notes cited. As the company moves ahead with capacity expansion and cost actions, the next set of quarterly updates will be watched for energy-cost trends and margin resilience.

Recommendations, suggestions, views and opinions given by experts in the cited reports are their own and do not represent the views of The Economic Times.