UltraTech Cement Ltd (ULTRACEMCO) Q1 FY27 Earnings Call: Guides Double-Digit Volume Growth, Q2 Cost Headwinds Rs. 130-140/Ton

UltraTech Cement Ltd held its Q1 FY27 earnings call on July 20, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

13.1% Volume Growth with EBITDA Above Rs.1,200/Ton

• 13.1% YoY domestic grey cement volume growth in Q1 FY 2026-2027, accelerating from 9.3% in the prior quarter, with capacity utilization improving to 81% (vs. 76% in Q1 FY 2025-2026).
• EBITDA of Rs.5,146 Cr (up 12% YoY) and PAT of Rs.2,604 Cr (up 17.2% YoY) for Q1 FY 2026-2027; operating EBITDA per ton remained above Rs.1,200.
• Net debt/EBITDA improved to 0.87x at Q1 FY 2026-2027 end; management expects to end FY 2026-2027 below 1x.
• India Cements (ICL) reported Q1 FY 2026-2027 revenue of Rs.993 Cr (21% growth) and volume growth of 19%; ICL EBITDA per ton improved sequentially from Rs.386 (Q2 FY 2025-2026) to Rs.603 (Q1 FY 2026-2027).
• Green power capacity reached 1,897 MW (47% of total power requirements) at Q1 FY 2026-2027 exit; management expects to reach 2.5–3 GW (period unspecified).

Double-Digit FY26-27 Target Backed by Brand Strength and Retail-First Model

• Targeting double-digit volume growth for full FY 2026-2027, citing strong brand fundamentals, distribution network of 76 facilities, 2,000+ warehouses, and 1,50,000 channel partners, and market share gains from converting B/C-category brand customers to UltraTech.
• Retail sales accounted for 65-66% of company volumes in Q1 FY 2026-2027, with institutional at 35% and RMC at 3.5% (477 plants); management noted India's RMC penetration remains below 20%, reinforcing cement as a branded product.
• Regional demand varied in Q1 FY 2026-2027: West and Central grew above 15%, North and South slightly below 15%, while East was the slowest due to elections and labor availability; Central was the highest-growing region.
• Management sees a structural demand upcycle in Eastern India over the next 2-4 years, driven by post-election land reforms in one Eastern state ("Management sees a structural demand upcycle in Eastern India over the next 2-4 years").
• Industry volume growth estimated at 7-8% for Q1 FY 2026-2027 per management's marketing intel, implying UltraTech significantly outperformed the market.
• India's urbanization at 35% currently — management cited "India's urbanization rate projected to reach ~39% by 2030" as a structural demand driver; India has 63 cities with >1M population, expected to reach 71 by 2030.

Q2 FY 2026-2027 Cost Headwinds of Rs.130-140/Ton; H2 Relief Conditional on Geopolitical Stability

• Sequential cost increase of Rs.130-140 per ton guided for Q2 FY 2026-2027 (July-September), lower than the typical Rs.200 due to higher volumes partly offsetting negative operating leverage; drivers include full war impact, monsoon season, plant maintenance, and higher fuel costs.
• Q1 FY 2026-2027 cost impact included fuel cost increase of Rs.40/ton (from Rs.870 to Rs.915/ton) and packing bag cost increase of Rs.20/ton (from Rs.9 to Rs.12/bag on average).
• H2 FY 2026-2027 per-ton costs could be lower than H1, conditional on the war ceasing, which would reduce ocean freight and insurance premiums (currently 4-5% vs. less than 1% historically).
• Limestone raising costs rose 13-14% QoQ in Q1 FY 2026-2027, attributed to sharp increase in industrial diesel prices (from Rs.78-80/liter to Rs.150s during the war period, with recent upward movement again).
• Blended coal cost was Rs.1.9/Kcal ($134/tonne) in Q1 FY 2026-2027; current Q2 FY 2026-2027 run rate is ~Rs.2/Kcal, with inventory limiting further increases; management now favors domestic coal over petcoke.
• Structural buffers mitigate cost pressures: green power at 47% of requirements, AFR substitution, reduced lead distance to 363 km (saving Rs.2.5-Rs.3/ton/km), and clinker conversion improved to 1.5.
• Industry expected to hold prices broadly steady through the monsoon quarter (Q2 FY 2026-2027) due to increasing costs, per management; pricing moves with demand and no specific Q2 FY27 guidance was provided.

Rs.17,000 Cr Capex to Drive Consolidated Capacity Beyond 242 MT by FY 2027-2028

• Capex of Rs.17,000 Cr committed over the next 2.5 years (through ~FY 2027-2028), with 55% of planned capacity additions for FY 2026-2027 already commissioned.
• Grey cement capacity to reach 212.7 MT by end of FY 2026-2027 and consolidated capacity beyond 242 MT by end of FY 2027-2028; management expects to exit FY 2026-2027 at this level in India.
• Operating cash flow to exceed Rs.20,000 Cr in FY 2026-2027, entirely reinvested into cement capex with dividends for shareholders; no current plans for further investment in cables and wires.
• Bulk of capex expansion concludes in FY 2027-2028; beyond that (period unspecified), management is exploring inorganic opportunities and has initiated plans to take capacity beyond 240 MTPA.
• Regarding industry capacity additions in FY 2027-2028, management noted that some industry players may revisit their expansion plans, so no firm estimate was provided.
• Green power capacity to reach 2.5-3 GW (period unspecified), from 1,897 MW (47% of total power) at Q1 FY 2026-2027 exit, per management.

ICL on Track for Rs.1,000/Ton EBITDA by Q4 FY 2027-2028

• Brand conversion of Jaypee and India Cements to 100% UltraTech is complete, with the combined brand growing 21% YoY in Q1 FY 2026-2027.
• ICL EBITDA per ton target of Rs.1,000 by Q4 FY 2027-2028 (January-March 2028), from Rs.603 in Q1 FY 2026-2027; integration journey including capex program completion and disposal of non-core land assets expected by Q4 FY 2027-2028 (or possibly a quarter earlier).
• Some ICL operating parameters still need to be brought in line with UltraTech Cement's standalone performance, per management.
• UltraTech's brand strength cited as key to outperforming peers on both volume and pricing, with a network of 76 operating facilities, 2,000+ warehouses, and 1,50,000 channel partners.

Rs.1,400/Ton EBITDA Exit Target for Q4 FY 2027-2028, Contingent on Stable Geopolitics

• EBITDA target of Rs.1,400 per tonne reaffirmed for the January-March 2028 quarter (Q4 FY 2027-2028), contingent on no war (stable geopolitical conditions).
• West Asia conflict and crude above $100/bbl cited as near-term risks; management expects prices to normalize and notes structural buffers (green power, AFR substitution, reduced lead distance).
• Dry weather in June and ongoing dry patches (e.g., Rajasthan) expected to negatively impact rural demand in FY 2027-2028 due to potential water crisis, per management.
• Wires & cables business on schedule: trial runs commenced, product launch reaffirmed for Q3 FY 2026-2027 with a capex of Rs.1,800 Cr (Rs.888 Cr spent/committed); working capital to stabilize to ~30 days by Q1 FY 2027-2028.
• Dividend policy based on percentage of profits; the Rs.100 special dividend paid in FY 2025-2026 is considered a one-off, but management expects good dividends going forward.
• River linking projects like Ken-Betwa expected to be cement-intensive as concrete river banks and structures are required; multiple packages already awarded, indicating imminent construction activity, per management.