UltraTech Cement

Investment case

Price-setter and consolidator

Why this business

India's largest cement producer (Aditya Birla group) with 200.1 mtpa of domestic grey-cement capacity and 205.5 mtpa globally after absorbing India Cements and Kesoram's cement business; it also runs the country's largest ready-mix concrete network (Q1FY27 RMC revenue Rs 2,235 cr, +22%) and white cement/putty (Birla White). With ~41 mt of quarterly volumes it holds roughly a quarter of Indian cement sales and is targeting 242.5 mtpa by FY28; it is also entering wires and cables (Rs 1,800 cr investment, launch Q3FY27).

What we believe

1. 01Scale leader with 205.5 mtpa (200.1 mtpa domestic) heading to 212.7 mtpa in FY27 and 242.5 mtpa by FY28 (~Rs 16,000 cr capex), which underpins a 9% volume CAGR to FY28 (Nirmal Bang) against ICRA's 6-7% industry growth - i.e. continued market-share gains.
2. 02Q1FY27 showed 13.1% domestic volume growth (UltraTech-branded +21.3%) with EBITDA/tonne of Rs 1,214 versus an ICRA industry estimate of Rs 880-930/t for FY27, demonstrating a cost and pricing premium over the sector.
3. 03Earnings recovery is under way: FY26 PAT rose 36% to Rs 8,188 cr on a 19% OPM (17% in FY25), and Q1FY27 PAT grew 17%; ROE at 11.1% is depressed by acquisition goodwill and the capex cycle and should rise as India Cements (Q1 normalised PAT Rs 52 cr) and Kesoram assets are turned around.
4. 04Cost levers: green power mix at 47%, 434 MW of WHRS, power cost down 10% YoY per tonne and 8-9 km lead-distance reduction, plus the GST cut on cement from 28% to 18% (late 2025) supporting demand.
5. 05Balance sheet remains manageable with borrowings of Rs 23,755 cr against Rs 76,624 cr of equity (gross D/E ~0.31) despite two acquisitions, and a 2.1% dividend yield (51% payout) provides support.

Why now

TTM P/E 38.4x and 4.39x book (screener, 7-Sep-2026); stock is down 9% over one year. 5-year average multiple not sourced. EV/EBITDA n.m.; dividend yield 2.1%.

Market disagreement

• Ambuja Cements: Ambuja trades at ~21x P/E but on an 8.9% ROE / 5.6% ROCE with FY26 profit flattered by other income; the Adani-group integration of ACC/Sanghi/Penna is still in progress, whereas UltraTech's EBITDA/tonne of Rs 1,214 is already best-in-class.
• ACC: ACC is optically cheap at ~12.5x P/E with 10.9% ROE, but it is a subsidiary inside the Adani cement structure with limited standalone strategy and no capacity leadership; UltraTech is the price-setter in most markets.
• Shree Cement: Shree trades at ~52x TTM P/E with a 7.5% ROE and FY26 PAT of Rs 1,749 cr on Rs 20,943 cr sales; UltraTech offers a lower multiple (38x TTM), a higher ROE and a far more diversified regional footprint.

Position sizing

Core Large cap  2.8% of the PMS on $31 Jul 2026 (August rank 13). Core positions are owned through the cycle for leadership and cash-flow quality.

Catalysts

• Q2FY27 results (Oct-2026): evidence that post-monsoon price hikes (Sep-2026) offset the guided Rs 130-140/t cost inflation.
• Commissioning of 15.9 mtpa of additions in FY27 (to 212.7 mtpa) and the Q3FY27 launch of the wires-and-cables business.
• Turnaround milestones at India Cements/Kesoram (normalised PAT positive in Q1FY27) and any further consolidation in the South.

Risks and response

• Cost inflation: management guided Rs 130-140/t of sequential cost increase in Q2FY27 (fuel +5%, raw material +9% YoY in Q1) which can erode EBITDA/tonne if monsoon-season pricing is soft.
• Industry capacity glut: 160-170 mt of additions over FY26-28 against 30-40 mt of annual incremental demand keeps utilisation near 70% and limits pricing power, especially in the South where India Cements' assets sit.
• Valuation and low ROE: at 38x TTM and 4.4x book with ROE of ~11%, the stock has little cushion if FY27 volume growth slips below double digits; screener flags a low 3-year ROE of 10.7%.

Thesis-break conditions

Not stated separately on this page; the risk list carries the monitoring triggers.

Review history

• 8 Sep 2026 · Yash Palod · one-pager in "Why We Own What We Own" (p50) · portfolio as of $31 Jul 2026
• 31 Aug 2026 · Classification in the August top-30: Core

Source: Buoyant_Why_We_Own_What_We_Own_Sep2026.pdf (portfolio as of 31 July 2026), p50. Internal; external publication of these fields is controlled by audience policy.