India Cement's CFO sees ebitda per tonne above Rs 1,000 crore in 3 years
India Cement, now a subsidiary of UltraTech Cement, anticipates a sharp rise in profitability. The company aims to achieve an Ebitda per tonne of over ₹1,000 within three years. This improvement will be driven by increased volumes, better margins, cost efficiency, and lower logistics expenses. UltraTech plans to invest ₹1,500 crore in India Cement over the next two fiscal years.
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India Cement is eyeing a sharp spike in its profitability, with earnings before interest, tax, depreciation and amortisation (Ebitda) per tonne crossing ₹1,000 in three years from just ₹40 in the March quarter, a top executive said."During this year, we target to cross an Ebitda per metric tonne of ₹500, FY27 should be crossing ₹800, and thereafter a four-digit mark," said Atul Daga, chief financial officer of India Cement that became a subsidiary of UltraTech Cement late in December.An improvement in volumes, higher margins by way of prices and cost efficiency, lower logistics costs, and overhead optimisation will aid the profitability, Daga told analysts on a call post the company's quarterly earnings. "Practically, all elements of the P&L are getting addressed for improvement," he said.The South India-centred company, which became a subsidiary of UltraTech Cement late in December, achieved operating Ebitda breakeven in March.Its interest rate outgo is down by 3.76% since the acquisition, falling to ₹38 crore in the March quarter from ₹64 crore in the year-ago period. UltraTechplans to spend ₹1,500 crore as capital expenditure on India Cements over the current amd next fiscal.
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Business Standard
a day ago
- Business Standard
Cement firms' Q4 volumes grow, but realisations decline amid weak pricing
Top Indian cement companies reported a healthy sales volume growth in the quarter ended March (Q4FY25), but saw a decline in their realisations amid weak pricing. Excluding Shree Cement (whose blended realisation remained flat year-on-year), UltraTech Cement, Ambuja Cements, JK Cement, Dalmia Bharat, Ramco Cements, and Birla Corp posted decreased realisations on a Y-o-Y basis. In Q4FY25, pan-India cement prices stood at Rs 362/bag, down by 3 per cent Y-o-Y. The South was hit the most with a 10 per cent decline in prices, according to Crisil Intelligence. Quarter-on-quarter (Q-o-Q), the prices grew by 2 per cent, with Q4FY25 being a seasonally strong quarter. According to Khushbu Lakhotia, director, India Ratings & Research, the cement price reduction was largely driven by a reduction in power and fuel costs, given the benign coal and petcoke prices. 'With a slow start to demand, large capacity additions and an increasing competitive intensity in FY25, cement prices witnessed the sharpest decline in nearly two decades. Prices remained weak as industry players focused on maximising sales volumes and market share growth,' Lakhotia said. UltraTech commissioned 17.40 million tonnes per annum (mtpa) capacity during FY25, while Ambuja surpassed 100 mtpa. Dalmia Bharat's capacity in FY25 increased to 49.5 mtpa from 44.6 mtpa in FY24. According to analysts at Mirae Asset Sharekhan, the consolidation in India's cement sector and the weak demand have put pressure on the pricing environment. The overall cement demand, however, improved by 4 per cent during Q4FY25, leading to higher volumes. Apart from Dalmia Bharat and Ramco Cements, all the other top firms posted an increase of anywhere between 3.3 and 16.9 per cent in their sales volume due to improved cement demand. Overall, the industry volume grew by 5 per cent Y-o-Y. UltraTech's volume growth was driven by its acquisitions of India Cements and Kesoram, while Ambuja's growth was on the back of Orient Cement and Penna Cement. However, blended earnings before interest, taxes, depreciation, and amortisation (Ebitda) of UltraTech and Ambuja declined on a Y-o-Y basis, despite lower input costs and better operating leverage, while that of Shree, Dalmia Bharat, and JK Cement improved. An industry expert, on the condition of anonymity, stated that the profitability of UltraTech and Ambuja saw only a limited impact from acquisitions. The overall performance of the two cement giants remained strong amid a comparatively low share of India Cements in UltraTech's total volumes and Ambuja completing the acquisition of Orient Cement in April 2025 (Q1FY26). Sequentially, all the top cement makers witnessed an improved, positive growth in blended Ebitda. All the cement firms were able to reduce total costs by 1-7.2 per cent Y-o-Y in Q4FY25 due to lower input costs, particularly that of fuel, and improved operating leverage. However, despite a reduction of around Rs 200/t in costs, the industry's Ebitda improved only marginally by Rs 20-30/t due to the continued weakness in cement prices, according to Lakhotia. Overall in FY25, the prices declined by 7 per cent Y-o-Y to Rs 340/bag. Meanwhile, the top companies' volumes grew anywhere between less than 1 per cent and over 10 per cent Y-o-Y. The blended Ebitda and realisations also declined. The companies managed to reduce their total costs in FY25. For FY26, the companies are optimistic about improved cement demand on the back of the government's focus on infrastructure and housing demand and price environment. According to the analysts at Mirae Asset Sharekhan, with the return of government capex, the demand and pricing are expected to improve. The margins of the whole sector are expected to improve from here on and will increase profitability. UltraTech's management stated that prices showed sequential improvement in April 2025 across most regions, notably in the southern markets, although overall realisation growth remained modest. It stated that April pricing trends were better compared to both March-end levels and the Q4 FY25 average. According to the analysts at JM Financial, the industry's profitability is likely to improve further in Q1FY26. Pan-India average cement prices have increased by 4 per cent Q-o-Q in the quarter so far (over Rs 15/bag), mainly led by sharp price hikes in the South and the East, while other regions were broadly flat on a sequential basis. 'With the early onset of the monsoon, we see an increasing possibility of some price reversal over the next few days,' the analysts noted. According to Lakhotia, the decadal high-capacity additions announced by companies, in addition to the ramp-up of the acquired assets that were operating at sub-optimal capacities earlier, could limit the uptick in prices despite a mid-to-high single-digit demand growth. 'Price hikes were taken by companies over April-May, that could support realisations in Q1FY26, although moderations are likely over June-July with the early onset of monsoons.' Going ahead, the cement firms have planned aggressive capacity expansion plans with UltraTech leading the pack. The company aims to expand its grey cement capacity to 195.8 mtpa from the current 183.4 mtpa. Ambuja aims to expand its capacity to 118 mtpa by FY26, while Shree Cement aims to enhance its capacity to over 80 mtpa by 2028 from the current capacity of 62.8 mtpa. Dalmia Bharat is eying a capacity of 75 mtpa by FY28 from the current 49.5 mtpa.
Economic Times
3 days ago
- Economic Times
Ambuja, Ultratech top cement bets as long-term tailwinds emerge, says Nomura
Spreads improve as prices rise, fuel costs fall Live Events Prices up, but discipline concerns remain (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel India's cement sector may be turning a corner, with Nomura placing its confidence in Ambuja Cements and Ultratech Cement as its top investment ideas in the space. Citing improving sector spreads, long-term demand momentum, and easing fuel costs , the brokerage said it prefers large-cap companies actively implementing sustainable cost-saving measures, as these players are best positioned to benefit from an eventual earnings Cements, owned by the Adani Group, has been assigned a 'buy' rating with a target price of Rs 690, implying a 25% upside from its June 4 close of Rs 552. Ultratech Cement, part of the Aditya Birla Group, also retains a 'buy' rating with a target price of Rs 12,800, representing a 16% upside from its last close at Rs 11,033.'We remain positive largely on account of long-term tailwinds, such as: higher volume growth than in the previous decade (CAGR of 7% over FY25-27F vs 4% over the past decade) and sustainable cost-saving measures to drive reduction in operating costs,' analysts at Nomura brokerage said it is bullish on Ambuja, Ultratech, Shree Cement and Ramco Cements Nomura said average cement spreads in Q1FY26 improved by Rs 171 per tonne quarter-on-quarter to Rs 2,652 per tonne, driven by a 3% rise in trade prices and a small dip in fuel costs. 'The 90-day lagged spread displays a high correlation with the industry unitary EBITDA (>0.85),' the brokerage international prices of pet coke and thermal coal, key inputs for cement production, also point to a more benign cost environment. 'The downward trajectory of global fuel costs is a positive for the India cement industry,' the brokerage all-India average cement prices rose by Rs 2 per bag month-on-month in June and Rs 12 per bag quarter-on-quarter in Q1, Nomura remains cautious about the sustainability of pricing gains. 'We remain cautious about a recovery in trade prices, as we believe that pricing indiscipline amid industry consolidation will likely keep trade prices range-bound.'In contrast, volume trends appear more promising. Nomura projects a 7% compound annual growth in demand through FY27, nearly double the pace seen in the previous decade. It believes companies focused on operational efficiency are best placed to benefit from this the other end of the spectrum, Nomura has maintained 'reduce' ratings on Dalmia Bharat ACC and Nuvoco, citing concerns over earnings quality and weaker margin read | Will cement stocks be surprise outperformers in the next bull run? 6 stocks with an upside potential of up to 57% (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Time of India
3 days ago
- Time of India
Ambuja, Ultratech top cement bets as long-term tailwinds emerge, says Nomura
India's cement sector may be turning a corner, with Nomura placing its confidence in Ambuja Cements and Ultratech Cement as its top investment ideas in the space. Citing improving sector spreads, long-term demand momentum, and easing fuel costs , the brokerage said it prefers large-cap companies actively implementing sustainable cost-saving measures, as these players are best positioned to benefit from an eventual earnings upcycle. Ambuja Cements, owned by the Adani Group, has been assigned a 'buy' rating with a target price of Rs 690, implying a 25% upside from its June 4 close of Rs 552. Ultratech Cement, part of the Aditya Birla Group, also retains a 'buy' rating with a target price of Rs 12,800, representing a 16% upside from its last close at Rs 11,033. 'We remain positive largely on account of long-term tailwinds, such as: higher volume growth than in the previous decade (CAGR of 7% over FY25-27F vs 4% over the past decade) and sustainable cost-saving measures to drive reduction in operating costs,' analysts at Nomura said. The brokerage said it is bullish on Ambuja, Ultratech, Shree Cement and Ramco Cements . Spreads improve as prices rise, fuel costs fall Nomura said average cement spreads in Q1FY26 improved by Rs 171 per tonne quarter-on-quarter to Rs 2,652 per tonne, driven by a 3% rise in trade prices and a small dip in fuel costs. 'The 90-day lagged spread displays a high correlation with the industry unitary EBITDA (>0.85),' the brokerage noted. Softening international prices of pet coke and thermal coal, key inputs for cement production, also point to a more benign cost environment. 'The downward trajectory of global fuel costs is a positive for the India cement industry,' the brokerage said. Prices up, but discipline concerns remain While all-India average cement prices rose by Rs 2 per bag month-on-month in June and Rs 12 per bag quarter-on-quarter in Q1, Nomura remains cautious about the sustainability of pricing gains. 'We remain cautious about a recovery in trade prices, as we believe that pricing indiscipline amid industry consolidation will likely keep trade prices range-bound.' In contrast, volume trends appear more promising. Nomura projects a 7% compound annual growth in demand through FY27, nearly double the pace seen in the previous decade. It believes companies focused on operational efficiency are best placed to benefit from this expansion. On the other end of the spectrum, Nomura has maintained 'reduce' ratings on Dalmia Bharat , ACC and Nuvoco, citing concerns over earnings quality and weaker margin profiles. Also read | Will cement stocks be surprise outperformers in the next bull run? 6 stocks with an upside potential of up to 57%
