UltraTech Cement reported a 21.3% increase in profit to ₹1,501.38 crore for the July-September quarter of FY27. This growth was driven by higher sales volumes and cost-cutting efforts. The company's grey cement volumes rose 13.8% year-on-year to 35.94 million tonnes, exceeding the industry growth estimate of 9%. Capacity utilization improved to 71% from 66% a year earlier, showing strong demand from infrastructure and housing projects.
Key Details
Despite the positive sales figures, the company faces significant cost pressures. Blended fuel costs increased to ₹2.09/kcal from ₹1.90/kcal in the previous quarter. These costs are expected to rise further to ₹2.20/kcal in the second half of FY27. As a result, Nuvama Research has cut its EBITDA estimates for FY27, FY28, and FY29 by 5%, 5%, and 9%, respectively. However, logistics costs remained stable due to a seasonal waiver in rail freight and operational efficiencies. UltraTech has also made progress in renewable energy, surpassing 2GW of green power capacity, which now makes up 45.4% of its energy mix.
Background
To address rising costs, UltraTech has raised prices. Trade segment prices increased by ₹7-10 per bag in September. The management noted that current spot prices are about 5% higher than the average for Q2FY27. Analysts have mixed views on the outlook, with some worried about ongoing cost pressures.
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UltraTech's results may affect cement sector stocks. Rising input costs could pressure margins across the industry. Investors will monitor further price changes and demand trends in the construction sector as the festive season approaches.
Watch for updates on UltraTech's pricing strategies and any future guidance on demand growth as the company deals with a challenging cost environment.
Based on reporting by: livemint.com, moneycontrol.com