ULTRACEMCO - UltraTech Cement Ltd Share Price

Outlook by Management:
UltraTech Cement projects a positive demand surge driven by government infrastructure capex, rural housing, and urban projects. Cement demand is expected to strengthen from Q4 FY25, supported by improved realizations (+1.4% QoQ in Q3) and price hikes in North/West (3%+). Central/West regions saw further price improvements in January. Rural demand remains robust due to strong monsoons and agricultural cash flows.

Key Highlights:

1. Expansions/Acquisitions:

   • India Cements: Acquired 81.49% stake; targeting turnaround within 12 months. Plans to debottleneck plants, expand brownfield capacity, and boost utilization (currently 57%). EV stands at ~Rs.12,075 crore for 14.45 MT capacity (<$100/ton).
   • Kesoram: Integration expected by FY25-end; potential cost/logistics optimization.
   • Organic Growth: Targeting 185 MT capacity by FY25-end, aiming for 211"“212 MT by FY26 with 10"“15 MT annual additions.

2. Operational Efficiency:

   • Cost Reduction: Fuel mix (58% pet coke) lowered costs to Rs.1.76/kcal (Q3); targeting Rs.1.7/kcal.
   • Sustainability: WHRS capacity to reach 511 MW (24% power needs) and renewables 2.1 GW (30% usage) by FY27.
   • Logistics: Reduced lead distance to 377 km (vs. 400 km earlier).

3. Financials:

   • EBITDA/ton rose 30% QoQ to Rs.964 (Q3 FY25).
   • Consolidated net debt post-India Cements acquisition: ~Rs.16,160 crore.

4. Demand Trends:

   • Industry growth projected at 5% in Q3 FY25, accelerating to 6"“7% in FY26. UltraTech targets double-digit volume growth.
   • Government capex recovery, rural housing, and infrastructure to drive long-term demand.

Regional Strategy:

• Focus on boosting market share in South (60 MT capacity post-acquisitions) and Northeast (via Star Cement stake).
• Price realizations to improve with rebranding and operational synergies.

Question 1:
Sumangal Nevatia (Kotak Securities):
"First on the volume growth, is it possible to share what would be the contribution of whatever 6-7 days of India Cements in the results, number one? And if you could give some more regional color as to which other regions, I mean, this 10% growth which region we have grown versus the industry higher or lower?"

Answer Summary:
India Cements' volumes were excluded from Q3 growth figures. North and West outperformed, while East and South lagged. Industry growth is estimated at ~5% for Q3. UltraTech's growth outpaced the industry.

Question 2:
Amit Murarka (Axis Capital):
"My first question is on India Cements. So, is there any thought around like any brand transition or tolling arrangement for India Cements as well or will it be sold in the coromandel?"

Answer Summary:
Brand transition plans for India Cements are under review. UltraTech will assess opportunities over the next quarter. Current focus is improving capacity utilization (57% in Q3) and cost efficiency via debottlenecking and brownfield expansions.

Question 3:
Rahul Gupta (Morgan Stanley):
"Atul sir, I understand like you said utilization rates for Kesoram and India cements will improve over a period of time. Can you help us understand how to look at the overall volumes for next year?"

Answer Summary:
UltraTech targets double-digit volume growth in FY26 with ~80-85% capacity utilization across 185 million tons (post-acquisitions). Kesoram and India Cements' improved utilization will support market share gains.

Question 4:
Prateek Kumar (Jefferies):
"My first question is on your leverage. We have not been given consolidated net debt..."

Answer Summary:
Consolidated net debt post-India Cements' open offer is ~Rs.16,160 crores. India Cements' net debt as of Dec'24 is Rs.877 crores (lower due to asset monetization). EV for India Cements acquisition is ~$97"“98/ton.

Question 5:
Jashandeep (Nomura):
"My first question is on limestone, especially in Tamil Nadu... How is both UltraTech and India Cements placed on longevity and brownfield optionality in Tamil Nadu?"

Answer Summary:
India Cements' Sankarnagar and Sankari plants have >25-year limestone reserves. UltraTech plans to reduce operating costs at India Cements via WHRS, renewables, and logistics optimizations, targeting cost alignment by FY27.

Question 6:
Pulkit Patni (Goldman Sachs):
"In the previous acquisition that we have made, rebranding has been a very big kicker... what today is the realization differential between UltraTech and India Cements?"

Answer Summary:
Realization gap is Rs.20"“25 per bag. Rebranding for India Cements will begin gradually (9"“12 months). Target EBITDA/t for India Cements is Rs.200"“300 below UltraTech's current levels, achievable in ~12 months.

Question 7:
Ritesh Shah (Investec Capital):
"Are we looking at any contingent liabilities specifically after the Supreme Court judgment which has allowed states to levy taxes on minerals, including limestone?"

Answer Summary:
No material contingent liabilities. UltraTech is only exposed to Chhattisgarh and Rajasthan. India Cements' debt includes no adverse liabilities. Industry capacity addition is projected at ~50 million tons in FY26.

Question 8:
Naveen Sahadev (ICICI Securities):
"My question was first on this Northeast plant. So, I think a year back we had floated this... what is the progress there?"

Answer Summary:
Northeast expansion (Letein Valley) is delayed due to land and mine acquisition complexities. UltraTech acquired 8.42% in Star Cement (Rs.776 crores) to deepen regional presence while evaluating greenfield options.

Question 9:
Pathanjali Srinivasan (Sundaram Mutual Fund):
"Sir, one thing I noticed in our presentation, so our power cost per ton has actually stayed more or less flat... why the drop in cost has not really happened here?"

Answer Summary:
Power costs were impacted by a one-time Rs.48 crore charge in Andhra Pradesh. Excluding this, power costs dropped to Rs.387/ton. FY26"“27 CAPEX is projected at Rs.9,000 crores and Rs.6,000"“7,000 crores, respectively.

Question 10:
Bhavin Chheda (Enam Holdings):
"But sir, when I am seeing the India cements numbers which were available for September 24, their debt was roughly above Rs. 2000 crores..."

Answer Summary:
India Cements' net debt reduced to Rs.877 crores (Dec'24) via non-core asset sales. Land revaluation (~Rs.5,300 crores) and plant-linked assets will drive future monetization. UltraTech aims to reduce lead distance further by 5"“6%.

Question 11:
Rashi Chopra (Citigroup):
"Just continuing on the cost, so from here on, how much more improvement can we see?"

Answer Summary:
Cost reduction targets (Rs.300/ton) will be detailed post-FY25. Realizations rose 1.5% in January (Central/West). UltraTech expects further price hikes in Q4. FY25 CAPEX is ~Rs.9,000 crores (excluding India Cements/Kesoram).

Question 12:
Satyadeep Jain (Ambit Capital):
"Just one question on coastal transport... do you see a higher share of coastal transport in the mix?"

Answer Summary:
Coastal transport (3% of logistics) may rise to 5%. Rail network improvements will boost Sewagram plant utilization. UltraTech prioritizes rail for cost efficiency.

Question 13:
Shravan Shah (Dolat Capital):
"In the fourth quarter, how much demand at India level we are looking at? And if possible, for FY26..."

Answer Summary:
Industry demand growth for Q4 FY25 is projected at >6"“7%. FY26 demand growth is estimated at 6"“7% (industry) and 10%+ for UltraTech. Clinker capacity additions: 6.7 million tons in 9M FY25, 10 million tons in FY26.

Question 14:
Anuj Jain (Globe Capital):
"Just want to understand... how much delay one can expect for the [Kesoram] integration?"

Answer Summary:
Kesoram's mine transfer approvals (Telangana/Karnataka) are in final stages. UltraTech expects consolidation by March 2025 with no delays.

Question 15:
Rajveer Tandon (Ventura Securities):
"So, the first question I had was for the Rs. 8,000 crore to Rs. 9,000 crore CAPEX... will you be taking any additional debt for that?"

Answer Summary:
CAPEX will be funded via internal accruals. Debt reduction will begin gradually post-FY25. India Cements/Kesoram's EBITDA/t to align with UltraTech's by FY27.

Question 16:
Eshwar Arumugam (ithought PMS):
"So, the first question I had was the South side cement prices sir... Is it because players are fighting to gain market share?"

Answer Summary:
South prices are subdued due to oversupply. UltraTech's South capacity share reaches ~30% (60 million tons). UBS stores drive rural growth, targeting Tier-2/3 markets. Inland waterways (Patliputra) will reduce logistics costs long-term.