UltraTech ups its capex ammo, eyes industry-leading growth
₹9,000 crore per annum each in FY24/ FY25 versus ₹6,000-7,000 crore earlier. Excluding the recent Kesoram Industries deal, UltraTech’s cement capacity as on December 2023 stood at around 133 million tonnes per annum (mtpa). The management is confident of achieving 200 mtpa capacity by 2028.
Further, the management has laid down the commissioning timeline for the second phase of expansion and also provided the granular details of its third phase of expansion. The company has preponed commissioning of capacities announced for the second phase of expansion. “UltraTech remains ahead of the schedule in terms of commi-ssioning of its capacities which would drive industry leading volume growth also aided by the consummation of Kesoram’s acquisition in FY25E," said an Antique Stock Broking report.
But price trends are dull. While all-India cement prices rose in October and November, there was a rollback in December due to moderate demand and prices are trailing below Q3 levels this month, the management said. However, easing fuel costs should aid profitability.
UltraTech’s fuel cost is expected to drop further by 7-8% in the next six months. Meanwhile, consolidated net debt rose sequentially to ₹5,541 crore in Q3FY24 versus ₹4,917 crore. With improving cash flows and reducing working capital requirements, debt is expe-cted to ease in Q4FY24.
Despite the spree of expansions, the management aims to become net cash positive by March 2025, this is excluding Kesoram Industries deal. This should help UltraTech bridge the valuation gap, albeit marginally, with close competitor Shree Cement. At FY25 EV/Ebitda, UltraTech is trading at valuations multiple of 18.13 times, a discount to Shree Cement’s 18.80 times multiple, showed Bloomberg
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