UltraTech Cement's Q1 profit jumps 49% to ₹2,226 crore, aided by strategic dealmaking and cement price hikes

UltraTech Cement , India’s largest cement-maker by volume, reported a 49% jump in its first-quarter net profit to ₹2,226 crore on Monday, aided by deals with India Cements and Kesoram Industries, along with cement price hikes. The net sales for the reported quarter increased 13% from the year-ago period to ₹21,275 crore.

The flagship company of the Aditya Birla Group reported a consolidated sales volume of 36.83 million tonnes for the quarter, representing a 9.7% year-over-year growth, following the strategic acquisitions of The India Cements Limited and Kesoram Industries' cement business. It was also able to improve its premium product mix to 33.8% of total sales volume, representing a 41% year-over-year increase. Despite a marginal 2% increase in raw material costs, its bottom-line growth was also aided by a 12% decrease in energy costs, largely due to reduced fuel prices.

In December 2024, UltraTech Cement completed the acquisition of a 32.72% stake from the promoters of India Cements, following which N. Srinivasan and other promoters of the company stepped down. UltraTech Cements holds a majority 55.49% equity stake in the company, and subsequently made India Cements a subsidiary of Ultratech Cements.

Following the acquisition, UltraTech Cement claims it successfully turned around India Cements, which has a capacity of 14.45 million tonnes per annum. According to the company, its concerted efforts led to India Cements generating an Ebidta of ₹92 crore, compared to a loss of ₹9 crore in the year-ago period.

Through debottlenecking, UltraTech Cement has been able to release an additional 300,000 tonnes per annum of capacity from India Cements’ assets in the northern region. Moreover, a capex plan is on the anvil for investments over the next two years to improve all areas of operations, bringing these assets up to par with UltraTech standards.

In March of this year, Kesoram Industries’ cement business was successfully transferred to Ultratech Cement. The strategic acquisition provided access to two integrated cement units, located at Sedam, Karnataka, and Basantnagar, Telangana, with a combined cement production capacity of 10.75 million tonnes per annum. 

Brokerage firm Nomura said in June that the cement price in India increased to ₹2 per bag, driven by a sharp rise of ₹19 per bag of cement in the southern states of Tamil Nadu and Kerala. In central, western, and southern regions, sans the two states, the price hikes were marginal.

The price hikes in cement have worked favourably for UltraTech Cement, especially when demand softens in the April–June period for cement companies, as the arrival of monsoon disrupts construction activities in the country.

UltraTech Cement is also betting on cement volumes to pick up amid a spurt in housing and infrastructure sectors, following a muted FY25. According to ratings agency ICRA, cement volumes are expected to grow by 6–7% in this fiscal year, driven by healthy demand prospects, which will lead to capacity additions of 43-45 million tonnes.

Ultratech Cement shares closed 0.50% higher on Monday.