UltraTech Q2 profit misses analyst estimate on lower volume, higher costs

Copyright © HT Digital Streams Limited All rights reserved. Dipali Banka 3 min read 18 Oct 2025, 06:22 IST The company’s raw material costs rose by nearly 1% and employee costs by 10% from the previous quarter. Photo: Reuters Summary The Aditya Birla Group’s cement arm reported a consolidated net profit of ₹1,238 crore for the quarter, a nearly 45% drop compared to the first quarter of FY26, according to the company’s stock market filings. UltraTech Cement Ltd, India’s largest cement maker, reported a sharp decline in net profit for the September quarter sequentially due to lower volumes and higher fixed costs. The Aditya Birla Group’s cement arm reported a consolidated net profit of ₹1,238 crore for the quarter, a decline of nearly 45% compared to the first quarter of FY26, according to the company’s stock market filings. That fell short of Bloomberg’s estimate of ₹1,456 crore based on a poll of 19 analysts. Higher fixed costs such as material costs and employee costs, combined with lower sales volumes, hurt profitability, pulling down the Ebitda per tonne sequentially. “Maintenance, advertising and personnel costs were marginally higher this quarter, contributing to a delta impact of around ₹200 per tonne. However, some of these costs will moderate next quarter,” Atul Daga, chief financial officer at UltraTech said in a post-earnings call with analysts, adding that lower quarter-on-quarter sales volumes affected operating leverage. “Below expectations” Satyadeep Jain, lead analyst for cement, metals, mining and utilities at Ambit Capital, said: “The actual numbers came in below expectations. The decline in profit was driven by a combination of factors such as price pressure, higher raw material, power and fuel costs, lower volumes, which increased fixed costs per tonne, higher maintenance costs against other July bonus payments, and the ultraTech. hand, the company’s year-on-year profit growth was supported by a rebound in cement prices from last year’s lows and gains from acquisitions.” The company’s raw material costs increased by nearly 1% and employee costs by nearly 10% for the second quarter of FY26 compared to the previous quarter. Revenue from operations fell nearly 8% sequentially to ₹19,607 revenue in the September quarter, however. 20% year-on-year due to higher prices compared to last year and acquisition gains. This growth is due in part to UltraTech’s consolidation moves. The company restated its previous results following the merger of Kesoram Industries’ cement division with effect from April 1, 2024. During the year, it also acquired 75.6% of The India Cements and completed the purchase of Birla White Wallcare Pvt Ltd for ₹234 crore, according to notes accompanying its financials. These results are therefore not directly comparable with the previous period. New capacity The cement maker also announced a fresh investment of ₹10,255 crore to expand its cement production capacity by 22.8 million tonnes per annum, including that of its subsidiary India Cements Limited, according to a company statement. This expansion will be carried out through a mix of brownfield and greenfield projects. Commercial production from these new capacities will begin in phases from FY28, taking the company’s total global cement capacity to 240.76 mtpa. “Our expansion plans are in full swing, and we expect to end this financial year with 200 million tonnes of capacity”, said Daga. Major projects like Vadhavan Port, Amravati, the new Mumbai airport development, upcoming data centers, urban real estate projects, and Google’s $15 billion AI center in Andhra Pradesh are all driving steady growth and demand in the cement. industry, he added. GST tailwinds Daga also highlighted that GST 2.0 is expected to increase demand for premium cement as more customers will be able to afford their aspirational brands. The company aimed to consolidate presence in the southern markets in FY25, and is now focusing on expanding further in the northern and western regions. “With the intention of further strengthening our position in these markets, we are starting the next phase of our growth with 22.8 million tons of incremental capacity which is a mix of largely brownfield and some greenfield expansions. Out of this 22.8 million tons, 18 million tons are focused on the northern markets, and 4.8 million tons for the western markets,” said Daga. In August, Aditya Birla Group and UltraTech Cement chairman Kumar Mangalam Birla said at the company’s annual general meeting that it would end FY26 with 200 million tonnes per annum of its original capacity. Managing Director KC Jhanwar, in his message to shareholders in the annual report, said it plans to invest ₹9,000-10,000 crore in capex in FY26. UltraTech’s domestic gray cement capacity is 186.86 mtpa and with its overseas capacity of 5.4 mtpa the total capacity stands at 192.26 mtpa. Daga said he expects rural markets to be a key driver in the second half of 2025. Jhawar added that the housing sector, especially rural housing, experienced strong demand, supported by a good monsoon and revised minimum support prices for farmers. On the urban side, changes in personal income tax rates and favorable interest rates are expected to add momentum to demand. Get all the corporate news and updates on Live Mint. 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