UltraTech Cement targets double-digit growth for FY26

ET Intelligence Group: UltraTech Cement reported robust volume growth for FY25 aided by acquisitions. At 14%, it was the highest annual growth in at least five years. For FY26, the country’s largest cement producer is hopeful of sustaining the momentum and is aiming to clock a double-digit growth on the back of capacity additions, expected uptick in infrastructure projects and urban real estate demand. It has earmarked ₹10,000 crore of capital expenditure for FY26, marginally higher than ₹9,428 crore spent in FY25. The acquired businesses are expected to achieve robust growth driven by rising operating efficiency, which will support the overall growth. Analysts have maintained ‘buy’ rating on the stock with 14-18% upside to the current price.

The company’s net profit increased 10% year-on-year to ₹2,482 crore and revenue from operations grew 13% to ₹23,063.3 crore in the March 2025 quarter. Sales volume rose 6% excluding acquisitions. The per-tonne operating profit before depreciation and amortisation (Ebitda) increased sequentially for the third straight quarter to ₹1,270, a 7% year-on-year growth.

UltraTech aims to cut costs by ₹300 per tonne in three years, including ₹86 per tonne achieved in FY25. It will be aided by cost-saving initiatives such as waste heat recovery and alternative fuel usage. While the full-year volume guidance is optimistic, the company anticipates slower volume growth in April and May due to heatwaves. In addition, while there are signs of real estate slowdown in urban areas, demand is likely to pick up in coming quarters.

India Cements, which was acquired in July 2024, achieved Ebitda breakeven in March 2025. UltraTech has been focusing on improving cost efficiency of this business-the interest rate for the company’s borrowings fell by 3.8% after the acquisition. Earlier, ET had reported that India Cements was on its way to achieve Ebitda per ton of over ₹1,000 by FY28 from the current level of ₹40.

Kesoram Industries, the other acquisition, delivered an Ebitda per ton of ₹399 in the March 2025 quarter. It aims to raise it to over ₹1,000 by the March 2026 quarter.

Motilal Oswal Financial Services (MOFSL) stated that the cement major is expected to continue to gain market share with its robust capacity expansion and increasing scale of operations, which will help in reduction of debt. “We estimate net debt to decline to ₹10,530 crore by FY27 from ₹17,669 crore as of March 2025 and net debt-Ebitda ratio to fall to 0.5 from 1.2,” the brokerage said in a report. MOFSL has valued UltraTech’s enterprise value (EV) at 20 times Ebitda for FY27 to arrive at target price of ₹13,900.