- Capacity expansion roadmap targets over 242 mnt/year by FY28
- Premiumisation, retail demand and operational efficiencies support profitability
India’s leading cement maker, UltraTech Cement, reported a strong rise in cement sales, with volumes increasing 13% y-o-y to 41.31 million tonnes (mnt) in Q1FY27 . Revenue rose 16% y-o-y to INR 24,465 crore, while EBITDA remained above INR 5,000 crore with EBITDA per tonne exceeded INR 1,200 in Q1FY27, despite rising fuel and packaging costs.
During the investor call, the company highlighted sustained market share gains, an accelerated capacity expansion programme, improving operational efficiencies and a positive demand outlook, while acknowledging higher fuel and operating costs during the upcoming monsoon quarter.
Capacity expansion accelerates
UltraTech Cement commissioned 8.7 mnt/year of additional cement capacity during Q1FY27, increasing its grey cement capacity to 205.5 mnt/year. The company plans to commission another 15.9 mnt/year during FY27 through greenfield projects at Visakhapatnam, Shahjahanpur and Petnikota, along with multiple brownfield expansions. An additional 29.8 mnt/year is planned in FY28, taking total cement capacity beyond 242 mnt/year. The company reiterated that the expansion programme, backed by approximately INR 17,000 crore of capital expenditure, is fully supported by secured limestone reserves.
Operational efficiency improves in Q1FY27
The company’s operational metrics continued to strengthen during the quarter. UltraTech Building Solutions (UBS) outlets increased 21% y-o-y to 5,802, expanding the company’s retail footprint. Average lead distance reduced to 360 km, improving freight efficiency, while Waste Heat Recovery System (WHRS) capacity increased to 434 MW. Renewable energy capacity rose to 1.46 GW, lifting the green power share to 45.6%, reflecting the company’s continued focus on lowering energy costs and reducing carbon emissions.
Pricing and demand trends
The cement maker stated that pricing environment was constructive despite the onset of the monsoon. Cement prices improved during June, particularly in eastern and southern India, while northern, western and central markets remained broadly stable. Premium products and blended cement continued to support realizations, and company expects pricing to remain relatively stable during the monsoon quarter.
Demand remained healthy across most regions, with central and western India leading volume growth, followed by strong performance in northern and southern markets. Although eastern India witnessed weaker demand due to election-related disruptions and labour shortages, the company expects a gradual recovery supported by policy implementation and improving economic activity.
Lower logistics and power costs offset fuel inflation
The company’s cost profile remained relatively stable in Q1FY27 compared with Q4FY26, as lower logistics and power costs helped offset higher fuel and raw material expenses. Logistics costs declined 1% q-o-q to INR 1,149/t, supported by reduced lead distance and network optimisation, while power costs eased 1% to INR 322/t due to higher utilisation of renewable energy and waste heat recovery systems. In contrast, fuel costs increased 5% q-o-q to INR 915/t amid higher petcoke and imported coal prices, while raw material costs rose 4% to INR 682/t.
The cement company expects cost pressures to intensify in Q2FY27. Fuel costs are projected to increase by around INR 40/t, while packing bag costs are expected to rise by approximately INR 20/t, taking overall operating costs higher by an estimated INR 130-140/t due to elevated fuel prices, scheduled kiln maintenance and seasonal operating deleverage. To mitigate these headwinds, the company will continue to focus on clinker conversion improvements, logistics optimization, lower power consumption and increasing renewable energy usage, with green power capacity targeted to expand to 2.5-3 GW.
Retail-led strategy supports market share
UltraTech noted that around 65-66% of its cement sales continue to come from retail customers, while Ready Mix Concrete contributes only 3.5% of total volumes. The company believes country’s retail-driven cement market continues to favour companies with strong brands, premium products and extensive distribution networks, positioning UltraTech to sustain market share gains.
Outlook
The cement maker expects cement demand to remain supported by continued government infrastructure spending, housing construction and growth in the individual home builder segment. While higher fuel costs and monsoon-related seasonal weakness are expected to temporarily increase operating costs during Q2FY27, stable pricing, continued premiumisation, expanding manufacturing capacity and ongoing efficiency initiatives are expected to support earnings. With capacity set to exceed 242 mnt/year by FY28 and sustained investments in green energy and distribution, company remains well positioned to strengthen its leadership in India’s cement sector over the medium term.
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