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UltraTech Cement — Q2 FY25
UltraTech Cement reported a weak Q2 FY25 with capacity utilization at 68% and volume growth of only 3%, impacted by election slowdown and extended monsoons.
bearish
medium
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UltraTech Cement reported a weak Q2 FY25 with capacity utilization at 68% and volume growth of only 3%, impacted by election slowdown and extended monsoons. EBITDA per ton fell to a multi-year low of INR 732, though management expects a sharp recovery in H2 driven by price improvements (current exit price INR 354/ton vs Q2 avg INR 348) and cost tailwinds from lower fuel costs. The company reiterated its long-term growth thesis, targeting 184 MTPA capacity by FY27 and cost savings of INR 300/ton through efficiency programs. Key risks include sustained pricing pressure if demand recovery disappoints and potential delays in Kesoram/India Cements acquisitions.
अल्ट्राटेक सीमेंट ने दूसरी तिमाही में कमजोर प्रदर्शन दिखाया। चुनाव और लंबी बारिश के कारण उनकी फैक्ट्री की क्षमता का केवल 68% ही इस्तेमाल हुआ और बिक्री में सिर्फ 3% बढ़ोतरी हुई। हर टन सीमेंट पर कमाई घटकर 732 रुपये रह गई, जो कई सालों में सबसे कम है। कंपनी को उम्मीद है कि दूसरी छमाही में कीमतें सुधरेंगी (अभी 354 रुपये प्रति टन) और कोयले की कीमतें गिरने से लागत कम होगी। उनका लक्ष्य 2027 तक सालाना 184 मिलियन टन उत्पादन क्षमता और हर टन पर 300 रुपये बचाना है। लेकिन अगर मांग नहीं बढ़ी तो कीमतों पर दबाव रहेगा और कंपनी की नई कंपनियों की खरीद में देरी हो सकती है।
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Capacity Utilization
68%
-3pp YoY
Q2 utilization dropped due to monsoons and election slowdown; management expects improvement in H2.
Fuel Cost (INR/Gcal)
INR 1.84
-8% QoQ
Fuel cost declined from INR 2.0 in Q1, with further reduction expected as high-cost contracts end.
Current Exit Price (INR/ton)
INR 354
+INR 6 vs Q2 avg
Prices improved from Q2 average of INR 348 to INR 354 in October, signaling recovery.
WHRS Capacity (MW)
308 MW
+30 MW vs FY24 end
Waste heat recovery capacity increased from 278 MW at FY24 end; target 450 MW by FY27.
What Changed vs Last Quarter
NEW
Capacity to reach 157 MTPA by March 2025
UltraTech will commission 8 MTPA in H2, taking total capacity to 157 MTPA by end of FY25.
NEW
Cost savings of INR 300/ton through efficiency program
Efficiency improvements in WHRS, renewable energy, clinker ratio, fuel mix, and lead distance are expected to deliver INR 300/ton cost savings by FY27.
NEW
Kesoram acquisition to close in Q4 FY25
NCLT hearings scheduled for Oct 25 and Nov 12; transaction expected to conclude by Q4 FY25.
UPDATED
H2 volume growth expected to be double-digit
Management expects UltraTech to deliver double-digit volume growth in H2 FY25, driven by rural demand and infrastructure pick-up.
DROPPED
Cost reduction target of ₹300+ per ton over three years
Management raised the cost reduction target from ₹200-300 to ₹300+ per ton, driven by logistics and WHRS improvements.
DROPPED
Normalized other expenses at ~₹675/ton from Q2
Other expenses per ton should normalize to ~₹675 from ₹755 in Q1, as one-time marketing spends subside.
DROPPED
Petcoke mix to exceed 45% for full year
Petcoke mix in fuel will ramp up from 37% to over 45% for the full year, reducing fuel costs.
NEW RISK
Sustained pricing pressure
Despite recent price hikes, industry profitability remains low; if demand recovery falters, prices could remain depressed.
NEW RISK
Delays in capacity additions
Industry-wide capacity additions of 30 MTPA per year face execution delays, which could impact supply-demand balance.
NEW RISK
Global fuel cost volatility
Management noted that petcoke sellers are holding inventory, suggesting potential price increases; ocean freight costs could also rise.
NEW RISK
Regulatory delays in acquisitions
CCI approval for India Cements and NCLT approval for Kesoram are pending; any delay could push closure beyond current fiscal.
RISK GONE
Sustained price weakness
Realizations declined 2.4% YoY and July prices are 1.5% softer sequentially, with no near-term recovery expected.
RISK GONE
Elevated other expenses
Other expenses at ₹755/ton were above normal due to one-time marketing spends; normalization to ₹675/ton is expected but not guaranteed.
RISK GONE
Industry overcapacity
Industry capacity utilization is ~70-76%, and 41 million tons were added in FY24, potentially pressuring pricing power.
RISK GONE
India Cements investment uncertainty
The 23% stake in India Cements is a non-controlling financial investment; management deflected questions on strategic intent, raising uncertainty.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q3 FY24, Q4 FY24
Realizations declined 2.4% YoY and July prices are 1.5% softer sequentially, with no near-term recovery expected.
Mentioned in Q2 FY24, Q3 FY24
Capital expenditure will be around INR 9,000 crore each in FY24 and FY25, including growth and maintenance CapEx.
Mentioned in Q1 FY25, Q4 FY24
Management raised the cost reduction target from ₹200-300 to ₹300+ per ton, driven by logistics and WHRS improvements.
Mentioned in Q1 FY24, Q2 FY24
The next phase of growth will be presented to the board before end of calendar year 2023, targeting completion by calendar 2027.
Fast read
Guidance and risk preview
Management expects UltraTech to deliver double-digit volume growth in H2 FY25, driven by rural demand and infrastructure pick-up.
Despite recent price hikes, industry profitability remains low; if demand recovery falters, prices could remain depressed.
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