UltraTech hosted conference call on January 23, 2025. In the conference call the company was represented by Mr Atul Daga-Executive Director and CFO.

Key Takeaways of the call

Most part of the calendar year 2024 was dull for the cement industry. However, the dull period ended in December 2024 and the industry has benefitted from continues improvement in demand which has also boosted the sentiments on cement prices.

Consolidated revenues for the quarter stood at Rs 17,193 crore.

Domestic EBITDA stood at Rs 964/MT in Q3FY2025 higher by Rs 232/MT QoQ.

Average realizations in Q3 improved by 1.4% QoQ. North and West witnessed best performance in prices with prices increasing more than 3%. In January there is further improvement in prices in Central and Western regions.

Realizations have further improved by 1-1.5% from December exit prices.

Capacity Utilization:

Capacity utilization was less than 70% in East and around 75% in other regions.

Clinker capacity utilization was around 76% YTD.

Capacity utilization stood at 57% in ICL and there is room to improve

Kesoram’s utilization stood at 70% and the company plans to increase the same by another 4-5% going forward.

Lead distance: Lead distance has reduced from 400 kms to 377 kms and the company expects further improvement in lead distance by 5-6% going forward.

WHRS: WHRS capacity has increased from 278 MW to 324 MW and the company plans to increase the WHRS capacity to 450MW at UltraTech and to 511 MW at consolidated level by FY2027.

At the increased capacity of around 211 MTPA, WHRS will meet around 24% of the power requirement.

Renewable power: Renewable power capacity increased to 752 MW as against earlier 612 MW. Further the company plans to increase the renewable power capacity to 2.1 giga watts at consolidated level as against 1.8 GW earlier planned.

Fuel Cost: Fuel cost stood at 1.76 Kcal in Q3FY2025 as against 1.84 Kcla in Q2Fy2025.

CAPEX: The company expects to incur CAPEX of around Rs 8000-9000 cr in FY2025 of which around Rs 6300 crore has been incurred till 9MFY2025.

The company plans to incur CAPEX of around 9000 crore in FY2026 and in FY2027 it expects to taper down to around Rs 7000 crore.

The company plans to incur CAPEX of around Rs 400-500 crore for Kesoram.

Expansion: As part of its ongoing capacity expansion program, UltraTech commissioned an additional 1.8 mtpa capacity.

The company plans to close the financial year with the total capacity of 185 MTPA including 2 acquisitions of Kesoram and ICL.

The company will add additional organic capacity of around 10-15 MTPA in FY2026.

Net Debt: Net debt stood at Rs 16160 crore after considering the money required to the tune of Rs 3142 crore to complete the open offer of ICL which is due  for payment on February 4,2025.

Investment in Star Cement:

Ultratech acquired a non-controlling financial stake equivalent to 8.42% of equity share capital of Star Cement at a total cost of Rs 776 crore.

Ultratech was on a lookout for opportunities in North East and the investment in Star Cement will help understand the region for the company.

India Cement(ICL):

Open offer was subscribed 110% which concluded on Jan 21,2025 at a price of Rs 390 per share.

UltraTech now holds 81.49% of the equity share capital of India Cements(ICL). There are regulatory processes to be followed by the company to bring down the stake to 75%.

Average cost of acquisition of equity stood at Rs 359 per share.

Net debt as on December 31,2024 in ICL stood at Rs 877 crore resulting in Enterprise Value of ICL at Rs 12075 crore for a capacity of 14.45 million tonnes per annum(MTPA)

Debt will be reduced at ICL by sale of noncore assets which the company has.

Initial review provides de-bottle necking opportunities at some of the plants of ICL and also brown field expansion opportunity in 2-3 plants of ICL.

Focus is on turnaround of ICL starting January 2025 and there will be return based CPAEX plans which are being worked upon.

Kesoram Industries:

Awaiting mines transfer approval from state authorities of Telangana and Karnataka.

Financials of Kesoram Cement will be consolidated with UltraTech with retrospective effect from 1st April, 2024 - appointed date of merger as per the NCLT approved scheme of arrangement.

Pricing: There is a price difference of around Rs 20-25 per bag between ICL brands and Ultratech.

The company expects prices to improve in south if demand picks up.

Outlook:

Demand is opening up which is good for the industry. Pent uo IHB demand, infrastructure demand and housing demand is picking up.

Rural market are driven by housing demand and is expected to be strong. Rural demand is expected to be positive with good monsoon, good crop and good harvest which will generate good cash flows for the rural market.

CAPEX programs have being gaining momentum from the end of Q3FY2025 but is still long way to go. The company expects government CAPEX to come back which will boost cement demand going forward.

The company expects double digit revenue growth in FY2026 as against industry growth of around 6-7% YoY in FY2026.