India's Ultratech cement tops cost pressures with strong demand (updated)
UPDATE 2-India's Ultratech cement tops cost pressures with strong demand Rewrites with analyst comment and closing levels
By Urvi Dugar
BENGALURU, July 20 (Reuters) - UltraTech Cement ULTC.NS, India's largest cement producer by capacity, reported a near 17% rise in first-quarter profit on Monday and unveiled plans to increase capacity addition in fiscal 2028.
The results suggest that UltraTech used its scale and market position to absorb higher fuel costs linked to the Middle East conflict better than smaller rivals, which helped strong volumes.
"Over the medium to long term, UltraTech's unmatched scale, wider distribution network and efficient cost structure should allow it to influence market dynamics more effectively than peers," said Saurabh Jain, head of retail equities at SMC Global.
With multiple players adding capacity, the ability to pass on costs or improve realisations may remain constrained, he said, adding that the primary concern remains pricing rather than demand.
The Aditya Birla company also expects a cement capacity addition of 29.8 million tonnes per annum (MTPA) in fiscal 2028, compared with its planned addition of 15.9 MTPA in 2027.
Prices of petcoke and coal, key fuels for cement kilns, remained elevated during the quarter. Although cement makers raised prices by about 2.5% to 3%, much of the benefit was offset by higher costs.
Operating EBITDA (earnings before interest, taxes, depreciation and amortization) per tonne improved 16 rupees per tonne from 1,198 rupees from last year.
Jain said UltraTech's operational efficiency initiatives should help maintain EBITDA per tonne at current levels despite fluctuations in input costs, with any recovery in cement prices providing additional upside.
Revenue from operations rose about 16% to 246.48 billion rupees ($2.56 billion), while domestic sales volumes climbed 13.1% to 39.2 million metric tons.
Shares of the company closed 1.5% higher at 11,903 rupees.
($1 = 96.4400 Indian rupees)
(Reporting by Urvi Dugar in Bengaluru; Editing by Subhranshu Sahu)
((UrviManoj.Dugar@thomsonreuters.com; +91 9558725583;))
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