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UltraTech Cement Ltd – Long-Term Investment Analysis

Lesson 53/225 | Study Time: 15 Min

Course: Top Quality Companies

UltraTech Cement Ltd – Long-Term Investment Analysis

(All figures in ₹ Crores unless specified)

1. Company Overview

UltraTech Cement Ltd. is India’s largest cement manufacturer and a global player in cement and ready-mix concrete. With operations spanning multiple states and export markets, UltraTech has an installed capacity exceeding 150 MMT and a market share of over 30% in India’s cement industry.

Its growth has been powered by strategic acquisitions (Jaypee Cement, Binani Cement, Century Textiles’ cement division, Kesoram and India Cements) and continuous capacity expansions.

2. Industry & Growth Prospects

Indian Cement Industry Outlook

Demand Drivers:

Infrastructure push under Gati Shakti and Bharatmala projects.
Affordable housing through PMAY.
Urbanisation and commercial real estate recovery.

Growth Forecast:

Industry expected to grow ~7-8% CAGR in volume over the next decade.
Strong correlation with GDP growth and construction sector momentum.

UltraTech’s dominant market position, scale efficiencies, and distribution network place it in a prime position to benefit.

3. Historical Performance – 20-Year Snapshot

Year	Volume (MMT)	Sales	Profit	NPM%
FY2005	15	2,703	3	0.1%
FY2010	20	7,172	1,093	15.2%
FY2015	45	22,936	2,015	8.8%
FY2020	82	42,125	5,811	13.8%
FY2024	119	70,908	7,003	9.9%
FY2025	136	73,365	6,039	8.2%
Tr. FY2026E	155	75,822	6,767	8.9%

CAGR (20 years):

Volume: 12%
Sales: 18%
Profit: 47%

4. Peer Comparison (FY2025)

Company	Volume (MMT)	Sales (₹ Cr)	Profit (₹ Cr)	NPM%	PE	PBV
UltraTech	136	73,365	6,039	8.2%	45–59	4–5
Shree Cement	35	~20,000	~3,300	~16%	50+	6+
Ambuja Cements	35	~14,000	~2,300	~16%	35+	3+
ACC	30	~13,000	~1,900	~15%	30+	2+

Observation: UltraTech has scale leadership but slightly lower margins than premium peers like Shree Cement, all due to heavy capex and acquisitions, indicating scope for operational efficiency improvements.

5. Segmental & Cost Analysis (Q1 FY26)

Revenue: ₹21,275 Cr (+13.06% YoY)
Net Profit: ₹2,221 Cr (+49% YoY)
NPM: 10.4% (vs. 7.9% LY)

Major Costs:

Cost Head	% of Total	Growth YoY
Power & Fuel	26%	+2%
Freight	25%	+5%
Raw Material	19%	+21%
Others	14%	Flat
D&A	6%	+21%
Employee	5%	+25%

6. Valuation Trends

Historical PE Range:

Low: 3 (FY2009) → High: 59 (FY2025)
Last 5-Year Avg: 26–45

Historical PBV Range:

Low: 1 (FY2009) → High: 6 (FY2007)
Recent Range: 4–5

7. Forward Estimates

FY2026E:

Volume: 149 MMT
Sales: ₹81,435 Cr (+13%)
Profit: ₹8,469 Cr (+40%)
EPS: ₹287
Fair Value Range (PE-based): ₹8,910 – ₹11,209
Fair Value Range (PBV-based): ₹7,751 – ₹10,335

FY2030E:

Volume: 219 MMT
Sales: ₹1,32,778 Cr
Profit: ₹13,278 Cr
EPS: ₹451
Price Potential: ₹13,969 – ₹17,574

8. Technical View

Current CMP: ₹12,411
Support Zone: ₹11,800 – ₹12,000
Resistance Zone: ₹13,500 – ₹14,000
Long-term trend remains positive, but consolidation likely before next breakout.

9. Long-Term Risk & Reward

Key Positives:

Market leader with economies of scale.
Strong cash flows for capacity expansion.
Pan-India distribution network.

Key Risks:

High energy and freight costs impacting margins.
Cyclical nature of cement demand linked to infrastructure cycles.
Regulatory and environmental compliance costs.

10. Portfolio Weightage Recommendation

Based on EPS, BV, and PEG considerations, ~1.5% allocation out of 2.4% in a diversified long-term portfolio is reasonable for conservative investors, with scope to increase during market corrections.

Conclusion

UltraTech remains a core cement sector holding for long-term investors, offering steady volume growth and strong industry positioning. Short-term margin fluctuations are offset by structural demand growth in India’s infrastructure and housing sectors.

Disclosure: This is a factual, unbiased report for educational purposes. Not a buy/sell recommendation.

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