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UltraTech Cement — Q2 FY24
UltraTech Cement reported strong domestic volume growth of 15% YoY in Q2 FY24, despite erratic monsoons, with overall growth including international at 16%.
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UltraTech Cement reported strong domestic volume growth of 15% YoY in Q2 FY24, despite erratic monsoons, with overall growth including international at 16%. The company maintained a 75% capacity utilization on 132 MTPA base. Fuel costs declined meaningfully, with blended consumption at $162/ton vs $178/ton last year, though management cautioned against annualizing savings due to volatile pet coke and coal markets. Pricing improved 5-7% from June exit across most regions, with current prices holding steady. The 24.4 MTPA expansion (including debottlenecking and slag mills) is on track for completion by mid-2025, targeting 159.65 MTPA. A third phase of ~20 MTPA will be presented to the board by end of calendar 2023. Key risk: fuel cost volatility from geopolitical disruptions could reverse margin gains.
अल्ट्राटेक सीमेंट ने सितंबर 2024 तिमाही में भारत में अपनी बिक्री पिछले साल से 15% बढ़ाई, भले ही बारिश अनियमित रही। कुल मिलाकर विदेशी बिक्री मिलाकर यह बढ़ोतरी 16% रही। कंपनी अपनी क्षमता का 75% उपयोग कर रही है। ईंधन की लागत घटी है - अब यह 162 डॉलर प्रति टन है, जो पिछले साल 178 डॉलर थी। लेकिन कंपनी ने कहा कि कोयला और पेट कोक के दाम में उतार-चढ़ाव से बचत हमेशा नहीं रहेगी। जून के बाद से सीमेंट के दाम 5-7% बढ़े हैं और अब स्थिर हैं। कंपनी 2025 के मध्य तक अपनी क्षमता 159.65 मिलियन टन प्रति वर्ष करने की योजना पर काम कर रही है। तीसरे चरण की 20 मिलियन टन की योजना 2023 के अंत तक बोर्ड को दिखाई जाएगी। मुख्य जोखिम: भू-राजनीतिक कारणों से ईंधन के दाम बढ़ सकते हैं, जिससे मुनाफा घट सकता है।
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Fuel cost volatility from geopolitical disturbances
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Domestic Volume Growth
15%
+15% YoY
Domestic cement volumes grew 15% year-over-year in Q2 FY24, outperforming industry growth.
Capacity Utilization
75%
N/A
Utilization at 75% on 132 MTPA capacity, indicating balanced demand-supply across regions.
Blended Fuel Cost
$162/ton
-$16/ton YoY
Blended fuel consumption cost declined to $162/ton from $178/ton in Q2 FY23, aiding margins.
Cement Lead Distance
403 km
N/A
Primary lead distance reduced to 403 km, supported by 1,100 warehouses and 280 rail sidings.
What Changed vs Last Quarter
NEW
Capacity expansion to 159.65 MTPA by mid-2025
The ongoing 24.4 MTPA expansion (including debottlenecking and slag mills) is on track for completion by June 2025 ±, with gradual commissioning.
NEW
Third phase of ~20 MTPA expansion to be announced by end of calendar 2023
The next phase of growth will be presented to the board before end of calendar year 2023, targeting completion by calendar 2027.
NEW
Fuel inventory to normalize to 45 days by March 2024
Current fuel inventory of 60 days will be reduced to normal levels of 45 days by end of March 2024.
NEW
CapEx spend of INR 6,000-7,000 crore for FY24
Full-year capital expenditure is expected to be INR 6,000-7,000 crore, with bulk spending already done in H1.
DROPPED
Capacity expansion to 135.25 million tons by FY24 end
Debottlenecking will add 4 million tons of grinding capacity, taking total capacity from 131.25 to 135.25 million tons by end of FY24.
DROPPED
Next phase of expansion to be announced by Q3/Q4 FY24
Board approval for next growth phase expected next quarter, targeting 200 million tons by 2030.
DROPPED
Green energy target of 60% by FY26
Renewable energy capacity to reach 1.2 GW and WHRS to 425 MW by FY26, with 100 MW solar/wind and 68 MW WHRS additions in FY24.
DROPPED
Alternate fuel usage to reach 9-10% by end of next fiscal
Investment of INR 250 crore in shredders and feeding systems to increase alternate fuel usage from 5% to 9-10% by FY25.
NEW RISK
Fuel cost volatility from geopolitical disturbances
Management highlighted that fuel markets are very volatile due to geopolitical issues, making cost predictions difficult.
NEW RISK
Pricing sustainability amid competitive pressures
While prices have increased 5-7% from June exit, management noted that if some companies cannot sell at higher prices, they may start pricing differently, threatening price discipline.
NEW RISK
Slag and fly ash cost inflation
Analyst raised concern about steep slag inflation, with slag potentially more expensive than clinker. Management confirmed these are key raw material cost items but did not quantify impact.
RISK GONE
Price pressure in Eastern India
New capacity additions in Eastern India may keep prices under pressure, as management acknowledged the region will remain a tight market.
RISK GONE
Volatile fuel costs
Petcoke prices are volatile; management noted a $15/ton spike in 10 days and uncertainty due to potential Chinese imports.
RISK GONE
Clinker capacity constraints
With cement utilization at 90%, clinker utilization is also above 90%, which could limit ability to meet demand if grinding capacity expands faster than clinker.
Fast read
Guidance and risk preview
The ongoing 24.4 MTPA expansion (including debottlenecking and slag mills) is on track for completion by June 2025 ±, with gradual commissioning.
Management highlighted that fuel markets are very volatile due to geopolitical issues, making cost predictions difficult.
View Risks →