UltraTech Cement Limited, India’s largest cement manufacturer and a flagship company of the Aditya Birla Group, has been a cornerstone of the country’s infrastructure growth. With a consolidated cement capacity of 184 million tonnes per annum (mtpa) as of March 2025, UltraTech commands a 22% share of India’s grey cement market, making it the third-largest cement producer globally, excluding China. The company’s announcement of its fourth-quarter results for FY25 (January–March 2025) on April 28, 2025, has placed its stock in the spotlight. The results, which were broadly in line with analyst expectations, showcased a 10% year-on-year (YoY) increase in net profit and a 13% rise in revenue, driven by robust volume growth and operational efficiencies. Following the earnings release, several brokerages, including Nuvama Institutional Equities and Motilal Oswal Financial Services, raised their target prices, citing UltraTech’s strong growth trajectory and cost-saving initiatives. This article delves into UltraTech’s Q4 performance, the factors driving its success, brokerage reactions, and the broader implications for investors and the cement industry.
Q4 FY25 Financial Performance: A Balanced Show
UltraTech Cement’s Q4 FY25 results, announced on April 28, 2025, met Street expectations, reinforcing its position as a market leader. According to the company’s filing with the Bombay Stock Exchange (BSE), consolidated net profit rose 10% YoY to ₹2,482 crore, up from ₹2,258 crore in Q4 FY24. This figure slightly missed the consensus estimate of ₹2,500 crore, as per posts on X. Revenue from operations grew 13% YoY to ₹23,063 crore, compared to ₹20,419 crore in the same quarter of the previous year, aligning closely with analyst forecasts of ₹23,000 crore. The company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) increased 11% YoY to ₹4,721 crore, with an EBITDA margin of 20.02%, slightly below the estimated 20% but improved from 17.9% in Q4 FY24, reflecting better cost management.
Volume Growth and Operational Metrics
The standout feature of UltraTech’s Q4 performance was its robust volume growth. Consolidated cement volumes surged 17% YoY to 35.08 million tonnes, with domestic grey cement volumes growing 10% YoY to 36.46 million tonnes, outpacing the industry’s estimated 4% growth. This was driven by strong demand from housing, commercial, and infrastructure projects, supported by the government’s focus on initiatives like the Pradhan Mantri Awas Yojana and Smart Cities Mission. Excluding acquisitions, domestic sales grew 6% YoY, indicating organic strength.
Grey cement realisation improved 1.6% sequentially to ₹5,052 per tonne, though it declined 2.3% YoY due to regional pricing pressures. Logistics and fuel costs fell 5% and 16% YoY, respectively, driven by lower pet coke and coal prices, contributing to margin expansion. The company achieved a capacity utilisation of 98% in Q4, reflecting operational efficiency. EBITDA per tonne rose 32% quarter-on-quarter (Qoq) to ₹1,143, validating management’s cost-saving initiatives, which realised ₹86 per tonne in FY25, with a target of ₹300 per tonne by FY27.
Strategic Acquisitions
UltraTech’s recent acquisitions, including The India Cements Limited and Kesoram Industries, bolstered its capacity and market presence. India Cements contributed 2.64 million tonnes in Q4, with a 28% Qoq and 9% YoY volume increase, achieving EBITDA breakeven in its first quarter under UltraTech’s management. The integration of these assets, along with planned brownfield expansions, positions UltraTech to reach 211 mtpa by FY27, reinforcing its dominance in the Indian cement market.
Factors Driving Q4 Performance
Several factors underpinned UltraTech’s in-line Q4 show:
- Strong Demand Environment: The cement sector benefited from sustained infrastructure spending and a revival in housing demand. Government projects, such as highways, airports, and urban development, coupled with private sector investments, drove volume growth. UltraTech’s diversified regional presence mitigated pricing volatility in specific markets.
- Cost Optimisation: Lower input costs, particularly for fuel and raw materials, boosted profitability. The company’s focus on alternative fuels and raw materials (AFR) and renewable energy reduced operating costs. Logistics efficiencies, including optimised transportation networks, further supported margins.
- Operational Excellence: UltraTech’s high capacity utilisation and streamlined operations enhanced productivity. The company’s investments in digital technologies, such as predictive maintenance and supply chain analytics, improved efficiency.
- Strategic Expansions: Acquisitions and capacity additions strengthened UltraTech’s market position. The integration of India Cements and Kesoram, combined with organic expansions, aligns with the company’s goal of achieving a 200+ mtpa capacity by FY27.
- Pricing Recovery: While YoY realisations were lower, sequential improvements in cement prices, particularly in Central and West India, signalled a potential recovery. Management expects prices to strengthen in FY26 as demand outpaces supply.
Brokerage Reactions: Upward Revisions in Target Prices
UltraTech’s Q4 results prompted several brokerages to revise their target prices upward, reflecting confidence in its long-term growth prospects. However, opinions on the stock’s valuation and near-term upside varied, leading to a mix of “Buy” and “Hold” ratings.
Nuvama Institutional Equities
Nuvama maintained a “Hold” rating but raised its target price to ₹11,859 from ₹11,574, valuing the stock at 18x FY27 EV/EBITDA. The brokerage noted that UltraTech’s performance was in line with expectations, driven by strong volume growth and cost efficiencies. Nuvama revised its EBITDA estimates upward by 2% for FY26 and 1% for FY27, factoring in a better pricing environment. However, it cautioned that the stock’s high valuation, trading at a P/E of 52.74 compared to the sector’s 27.16, could cap upside. Risks include a sharp decline in cement prices or rising input costs.
Motilal Oswal Financial Services
Motilal Oswal reiterated a “Buy” rating with a target price of ₹13,900, one of the highest among brokerages, implying a 32% CAGR in profit after tax (PAT) over FY25–27. The brokerage highlighted UltraTech’s industry-leading volume growth, cost-saving initiatives, and capacity expansions. It expects demand recovery, government spending, and real estate growth to drive performance, with the stock trading at a reasonable 19x FY27 EV/EBITDA.
JM Financial
JM Financial named UltraTech its top pick in the cement sector, raising its target price to ₹13,500 from ₹13,000, based on 19x FY27E EV/EBITDA. The brokerage emphasised UltraTech’s structural improvement in return ratios, driven by rising asset turnover, low-cost expansions, and improving profitability. It anticipates a net debt reduction to ₹105.3 billion by FY27 from ₹176.7 billion in FY25, strengthening the balance sheet.
Antique Stock Broking
Antique maintained a “Buy” rating with an unchanged target price of ₹12,800, citing UltraTech’s cost-saving target of ₹300 per tonne over FY25–27, of which ₹86 per tonne was achieved in FY25. The brokerage expects double-digit organic volume growth in FY26, outpacing the industry’s 7–8% growth, driven by capacity additions and strong demand.
Macquarie and Citi
Macquarie retained an “Outperform” rating, increasing its target price to ₹12,705, while Citi raised its target to ₹13,100 from ₹12,500, both with “Buy” ratings. Macquarie highlighted UltraTech’s diversified regional mix and timely capacity additions, expecting margin improvements from price hikes and cost savings. Citi forecasted a 12% volume CAGR through FY25–27, with the stock trading at an enterprise value per tonne (EV/tonne) of $180, below its historical peak of $250.
Contrarian Views
Some brokerages, like HDFC Securities, took a more cautious stance, estimating an 11% volume CAGR over FY25–27 but noting high base effects and regional pricing pressures. The brokerage maintained a neutral outlook, citing the stock’s premium valuation.
Management Commentary and Outlook
In the Q4 earnings call, UltraTech’s management, led by CFO Atul Daga, expressed confidence in the company’s growth trajectory. Key highlights included:
- Volume Guidance: UltraTech expects double-digit organic volume growth in FY26, compared to the industry’s 7–8% growth, driven by infrastructure and housing demand. Near-term demand may be tempered by heatwaves, but a recovery is anticipated in H2 FY26.
- Capex Plans: The company plans ₹9,000–10,000 crore in capital expenditure for FY26 to support capacity expansions, including 27 million tonnes by FY27.
- Cost Savings: UltraTech aims to achieve ₹300 per tonne in cost reductions by FY27, with ₹86 per tonne already realised. Investments in renewable energy and AFR will further lower costs.
- Pricing Outlook: Cement prices are expected to recover from Q4 FY25 averages, supported by demand growth and stabilising supply dynamics.
- Sustainability: UltraTech’s focus on green energy, with 24% of its power from renewable sources, aligns with its net-zero goal by 2050.
The management also highlighted the successful integration of India Cements, which achieved EBITDA breakeven in Q4, and plans for brownfield expansions to enhance efficiency.
Implications for Investors
UltraTech’s Q4 results and brokerage upgrades have several implications for investors:
- Growth Potential: The company’s leadership in volume growth, capacity expansion, and cost optimisation positions it for sustained outperformance. Its target of 211 mtpa by FY27 reinforces its market dominance.
- Valuation Concerns: The stock’s P/E ratio of 52.74, compared to the sector’s 27.16, and price-to-book ratio of 5.78 suggest a premium valuation. Investors must weigh growth prospects against potential downside risks.
- Dividend Appeal: UltraTech declared a dividend of ₹77.5 per share (775% on a face value of ₹10), up from ₹70 in FY24, offering a yield of 0.65% at current prices. This enhances its appeal for income-focused investors.
- Risk Factors: Risks include cement price volatility, rising input costs, and macroeconomic uncertainties, such as monsoon disruptions or policy changes affecting infrastructure spending.
Broader Industry Context
The Indian cement industry is poised for growth, driven by government infrastructure investments, urbanisation, and housing demand. The RBI’s focus on monetary stability and the government’s ₹11.11 lakh crore infrastructure budget for FY25 support the sector’s outlook. However, challenges include pricing pressures due to competition and capacity additions, as well as rising energy costs. UltraTech’s peers, such as Ambuja Cements, ACC Limited, and Dalmia Bharat, also reported strong Q4 volumes but faced similar pricing headwinds. UltraTech’s scale, cost leadership, and strategic acquisitions give it a competitive edge.
Conclusion
UltraTech Cement’s Q4 FY25 results, with a 10% YoY profit increase and 13% revenue growth, met analyst expectations, driven by robust volumes and cost efficiencies. Brokerages like Nuvama, Motilal Oswal, and JM Financial raised target prices to ₹11,859–₹13,900, reflecting confidence in UltraTech’s double-digit volume growth, capacity expansions, and cost-saving initiatives. Despite a premium valuation, the stock’s 19.06% YTD return, 245.38% five-year performance, and ₹77.5 dividend make it attractive for long-term investors. However, near-term risks, including pricing volatility and high valuations, warrant caution.
As UltraTech aims for a 211 mtpa capacity by FY27 and capitalises on India’s infrastructure boom, it remains a top pick in the cement sector. Investors should monitor cement price trends, capex execution, and macroeconomic factors to gauge the stock’s trajectory. With its strong fundamentals and strategic vision, UltraTech Cement is well-positioned to cement its leadership in India’s growth story.
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