UltraTech gears up to beat peers with cost control, capex focus
₹4,114 crore in Q4FY24. Going into FY25, profitability prospects appear bright. In April, cement prices rose in the southern, eastern, and Maharashtra markets, the management said.
During this financial year, barring the election and monsoon blip, the UltraTech management expects a largely stable pricing environment. That, accompanied with lower fuel costs should help. In the near term, UltraTech expects fuel cost to decline from $150/tonne to $130/tonne and its benefits on earnings are likely to reflect in the next few quarters.
The focus on controlling costs will continue. In the next two to three years, UltraTech aims to reduce its operating cost by ₹300-400/tonne through internal improvements such as increasing the share of green power, alternative fuels and reducing the lead distance. This bodes well for UltraTech’s long-term earnings outlook and helps gain an edge over peers.
“Even as we revise down our FY25E Ebitda by about 9% (tracking weak cement prices and its outlook), keeping faith on cost efficiency measures, we retain our FY26E forecast," said the ICICI Securities report. But post the Adani Group’s entry, the earnings narrative for large cement manufacturers continues to be driven by volume growth and pace of capacity additions. In Q4FY24, volumes for UltraTech’s domestic operations grew by 11.2% year-on-year to 33.22 million tonnes per annum (mtpa), outperforming estimated industry’s high single-digit.
Thus, indicating continued market share gains for UltraTech. In FY24, domestic grey volumes as well as consolidated volumes jumped 13% year-on-year, closing the year on a strong note. The management expects some slowdown in H1FY25 demand amid the elections, followed by the monsoon season, but it is likely to
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