UltraTech Cement, India’s largest cement manufacturer, continues to outpace industry growth as capacity expansion, operational efficiencies, and infrastructure-led demand converge into a multi-year growth cycle. ICICI Securities has reiterated a BUY rating with a 12-month target price of Rs 15,000, implying 21% upside from current levels. The Q3FY26 performance underscores UltraTech’s ability to convert scale into profitability, with strong volume growth, expanding EBITDA per tonne, and disciplined capital allocation. As capacity utilization improves and cost efficiencies deepen, UltraTech appears structurally positioned to deliver superior earnings growth through FY28, even amid cyclical volatility in cement prices

Research Call and Valuation Snapshot

ICICI Securities maintains a BUY rating on UltraTech Cement with a target price of Rs 15,000.
The valuation is anchored on 19x EV/EBITDA, based on the average of FY27E and FY28E earnings, reflecting confidence in sustained margin expansion, strong cash flows, and improving returns on capital. At the current market price of Rs 12,369, the risk-reward remains favorable for long-term investors seeking exposure to India’s infrastructure and housing upcycle.

UltraTech’s Scale Advantage: Capacity That Shapes the Market

UltraTech’s cement capacity now stands at 194.06 million tonnes per annum, the largest in India.
The company’s footprint spans every major region—South (50.5 mtpa), North (37.5 mtpa), West (34.6 mtpa), East (33.3 mtpa), Central (32.9 mtpa)—along with 5.4 mtpa of overseas capacity. The consolidation of India Cements and Kesoram Industries has materially strengthened UltraTech’s pan-India presence, reinforcing pricing power and distribution reach.

Management is executing an aggressive expansion pipeline of ~27 mtpa over FY26–FY27, targeting 218 mtpa by FY27E and ~241 mtpa by FY28E, providing long-term visibility and scale-driven operating leverage.

Q3FY26 Performance: Volumes Lead, Margins Follow

UltraTech delivered a strong Q3FY26, marked by industry-leading volume growth and resilient profitability.
Consolidated revenue rose 22.8% YoY to Rs 21,829.7 crore, driven by a 28% YoY increase in volumes to 38.9 mtpa, aided by recent acquisitions. Adjusted organic volume growth stood at a healthy 15% YoY.

EBITDA per tonne improved 5.7% YoY to Rs 1,007/tonne, despite seasonal and pricing pressures, while consolidated EBITDA surged 35.3% YoY to Rs 3,915 crore. Net profit increased 27% YoY to Rs 1,725 crore, reflecting strong operating leverage and cost discipline.

Efficiency Is the Earnings Multiplier

Operational efficiency remains UltraTech’s most durable competitive advantage.
For 9MFY26, EBITDA per tonne climbed to Rs 1,042, up 20.3% YoY, supported by a structurally lower cost base. Management has reiterated a Rs 300/tonne cost-savings roadmap over the next two to three years.

Key levers include:

Renewable energy usage rising to ~41–42%, targeted at ~60% by FY27–FY28

Improved clinker factor at 1.49

Reduced average lead distance to 363 km

Optimized fuel mix and logistics efficiencies

ICICI Securities estimates EBITDA per tonne to expand from Rs 924 in FY25 to Rs 1,426 by FY28E, materially lifting margins.

Demand Visibility Strengthened by Infrastructure Push

India’s infrastructure pipeline is providing durable demand support beyond near-term cycles.
Management highlighted strong momentum across roads, metros, railways, ports, airports, and urban development projects. Cement demand is expected to grow at 7–8% CAGR over the medium term, with institutional and infrastructure demand outpacing retail trade volumes.

Capacity utilization improved from 71% to 77% in Q3FY26 and is expected to exceed 90% in Q4FY26E, enabling UltraTech to absorb new supply without margin dilution.

Brand Migration Enhances Realisations

The integration of India Cements and Kesoram Industries is translating into higher realizations.
Brand conversion has crossed ~58% for India Cements and ~69% for Kesoram, with full migration targeted by mid-2026. Premium and value-added products now account for ~36% of total volumes, reinforcing UltraTech’s shift toward higher-margin segments.

Sequential pricing softness in Q3FY26 has begun to reverse, with Rs 6–8 per bag price improvements, supporting near-term realization recovery.

Financial Trajectory: Growth with Balance Sheet Discipline

ICICI Securities projects robust earnings growth through FY28.

Net debt to EBITDA stands at ~1.08x, with management targeting ~1.0x by FY26-end, supported by asset monetization and strong operating cash flows.

Risks Investors Should Track

Key risks include demand slowdown, delays in capacity expansion, commodity price volatility, and heightened competition.
However, UltraTech’s scale, execution capabilities, and diversified regional exposure mitigate downside risks relative to peers.

Investment View: A Compounding Leader in a Cyclical Industry

UltraTech Cement stands at the intersection of scale, efficiency, and demand visibility.
As capacity ramps up, margins expand, and balance-sheet metrics strengthen, the company is positioned to compound earnings through the next cycle. ICICI Securities’ BUY call with a Rs 15,000 target reflects confidence that UltraTech’s strategic advantages will continue to translate into shareholder value over the medium term

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult a financial advisor before making investment decisions.