UltraTech Cement Q2 FY27 Earnings Call: 13.8% Volume Growth Beats Industry, Rs. 1,400/Ton FY28 Target Reaffirmed (ULTRACEMCO)

UltraTech Cement Ltd held its Q2 FY27 earnings call on October 19, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Volume-led beat with operating leverage kicking in

• Net profit up 21% YoY — Q2 FY 2026-2027 vs Q2 FY 2025-2026, driven by 13.8% volume growth and stable realisations despite rising input costs.
• Capacity utilisation reached 71% in Q2 FY 2026-2027 vs 66% in Q2 FY 2025-2026, with management highlighting that "South markets are transforming" as the strongest regional momentum.
• Fixed costs per ton declined 6% YoY in Q2 FY 2026-2027, demonstrating operating leverage.
• Volume growth comfortably beat industry — industry demand growth for FY 2026-2027 is estimated at ~10%, against UltraTech's 13.8% YoY in Q2 FY 2026-2027.
• Trade ratio stable at 65-67% in FY 2025-2026 (industry sales ~465Mt vs UltraTech ~145Mt), which management cited as evidence of sustained retail housing demand.
• 47% of power needs from non-fossil sources in Q2 FY 2026-2027, with 2 GW of captive renewable capacity and a thermal substitution rate of 7.2%.

Pricing power returns; fuel costs the key swing factor

• Prices exited September ~3% above the Q1 average — pan-India trade prices were broadly stable vs Q1 FY 2026-2027, with further increases in October FY 2026-2027 whose full benefit lands in Q3 FY 2026-2027 earnings.
• October 2026 spot realisations guided ~5% above the Q2 FY 2026-2027 average.
• Fuel cost rose to Rs.51.5/bag in Q2 FY 2026-2027 (vs Rs.45/bag in Q2 FY 2025-2026), with fuel rates at ~Rs.2.09/Kcal; pet coke dependence cut to 25% of the mix in response to the West Asia crisis.
• Kcal cost guided at ~2.1-2.2 for Q3/Q4 FY 2026-2027 (~$140-150/ton), with the current Rs.2.2 Kcal cost expected to sustain through H2 FY 2026-2027 assuming crude at $180/bbl, barring geopolitical disruption.
• H2 FY 2026-2027 cost curve flat despite inflation — management attributed the absence of a significant cost curve increase despite pet coke, Indonesian coal and PP inflation to low-price fuel/polymer contracts secured by the company.
• Margin expansion now pricing-led — CFO Atul Daga said pricing power, not cost savings alone, is driving expansion from Q2 FY 2026-2027 onwards, citing the industry being "sold out" and a "sweet spot" of price improvements, volume growth and cost optimisation.
• Q4 FY 2026-2027 may see marginal further fuel cost impact, limited by inventory on elevated pet coke (currently $180); no major increase expected for the rest of FY 2026-2027.

204.7mt commissioned; North India flagged for next expansion

• 4.6mt commissioned in September FY 2026-2027, taking domestic capacity to 204.7mt; management remains on track for the 240mt capacity target (period unspecified).
• H1 FY 2026-2027 capex of Rs.5,882 crores; full-year FY 2026-2027 guidance maintained at ~Rs.10,000 crores, subject to a post-Q3 review.
• North India identified as the next expansion focus — management cited consistently high capacity utilisation, with detailed plans expected before the end of FY 2026-2027.
• India Cements running at ~Rs.500/tonne in its books; major kiln shutdowns for upgradation (WHRS, preheater height) target a four-digit cost improvement, with management targeting Q4 FY 2027-2028 as a "fabulous quarter" for the unit.
• Rs.160/tonne Tamil Nadu levy fully accounted for in Q2 FY 2026-2027, per CFO Atul Daga, with no additional costs expected going forward.
• Interest costs rose ~22% QoQ in Q2 FY 2026-2027 on raising Rs.5,000 crores of NCDs at 7.25%, which the CFO characterised as a fantastic decision given subsequent rate movements.
• Net debt/EBITDA rose to 1.26x at end-September FY 2026-2027 (from 0.94x at end-March FY 2025-2026) on capex and dividend payment; management targets below 1x by end-March FY 2026-2027.

Ramp-up accelerated; FY 2027-2028 the maturity marker

• UltraVolt launched September FY 2026-2027 with a planned Rs.1,800cr investment (board approved); Rs.1,100cr spent/committed as of Q2 FY 2026-2027.
• Revenue ambition of Rs.16,000-18,000 crores — the Rs.10,000cr target (at Feb 2025 copper prices) guided to autopilot to Rs.16,000-18,000cr depending on copper prices (period unspecified).
• Already #2 in installed capacity in cables & wires, with annualised copper consumption capacity of 78,000 tons.
• Distribution at 15,000 pin codes as of Q2 FY 2026-2027 with material availability built across the network; retail reach crossed 80,000 points with 1,500 channel partners signed up, though stock-outs persist due to production ramp-up.
• Q1 FY28 (Apr-Jun 2027) the first meaningful evaluation window — CFO Atul Daga tempered near-term expectations, noting the business is ~25 days old as of Q2 FY 2026-2027, with FY28 the target for maturity; no utilisation or margin guidance given for that timeframe.
• Market share prioritised over near-term ROC — FY 2025-2026 UltraVolt ROC was 11-13% vs 22-23% for wires and cables; the business is 25 months old as of Q2 FY 2026-2027 with rapid dealer adoption.
• Pricing at market parity, no undercutting — differentiation via unique products (class 5 insulation, e-beam technology, GreenCore entry-level wire) commanding a premium; expansion limited to PVC conduit, explicitly ruling out fans, tube lights or bulbs.

South sold out; UBS network scaling toward 10,000 stores

• South capacities fully sold out in Q2 FY 2026-2027 — strong demand despite muted infrastructure activity; regional capacity reached ~50 million tons with 15-20% volume growth and strong pricing.
• Temporary South headwinds — aggregates crisis in Kerala/Karnataka and movement bans in Tamil Nadu; growth drivers cited include Chennai metro construction, housing in Tamil Nadu, the auto sector and data centers.
• South profitability to converge with All-India average (period unspecified), with a "big delta improvement" expected following completion of the India Cements plant refurbishment in FY 2026-2027.
• UBS retail network contributed >25% of total trade sales in Q2 FY 2026-2027.
• UBS store target of 10,000 by FY 2028-2029, up from the current ~6,500.
• Premium cement share at 37% and blended cement share at 67.3% in Q2 FY 2026-2027.

Rs.1,400/ton FY28 target reaffirmed; growth plan pending

• Rs.1,400/ton EBITDA target for FY 2027-2028 reaffirmed (exit March 2028) — CFO Atul Daga said current cost pressures are expected to be offset by price increases, keeping the target on track despite the current lag in pricing vs cost inflation.
• Double-digit volume growth guidance for FY 2026-2027 not retracted — management reiterated the prior guidance for UltraTech.
• Strong H2 FY 2026-2027 and FY 2027-2028 demand outlook — management cited data centers, private sector capex, semiconductors and government metro extensions as key drivers, expecting very good industry volume growth over the next 2-3 years through FY 2028-2029.
• Industry H1 FY 2026-2027 volume growth ~8% (Q1: 6.5% actual, Q2: ~9% guided), with stronger H2 FY 2026-2027 expected.
• Rs.13.4 lakh crores project pipeline in announcements by early September FY 2026-2027 cited by management as a key demand driver.
• Next organic expansion phase beyond 240mt being finalised — pending announcement as of Q2 FY 2026-2027; management committed to delivering capital projects within stated timelines and costs, and dismissed speculation of unrelated diversification, reiterating cement as the core focus.
• Risks flagged — rural demand may soften in some areas (though 40% of rural markets no longer depend on agri and 4 years of strong monsoons support demand); domestic thermal coal availability is a FY 2026-2027 constraint as Coal India prioritises TPPs; West Asia-driven cost pressures persist.