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UltraTech Cement (UTCEM) reported consolidated EBITDA of ~Rs50bn (up 14% yoy, down 10% qoq), in line with our estimate. Domestic grey cement volumes grew ~13% yoy (vs industry growth of ~8%), while grey realization rose ~4%/6% qoq/yoy, led by cement price hikes in Apr/May-26. Fixed cost/t increased 8%/14% yoy/qoq, primarily due to higher packing material cost. Inflation in unit variable cost (flat logistics cost) was limited to ~3%, both yoy and qoq, resulting in overall operating costs rising ~4%/5% yoy/qoq. Consequently, EBITDA/t stood at Rs1,215 (Emkay: Rs1,190) vs ~Rs1,200 in 1QFY26 and ~Rs1,255 in 4QFY26. Our view: We believe UTCEM offers a safe zone amid the current volatile situation and remains our top pick. We continue to back its ability to deliver cost savings and consolidate its pole market-share position. We raise FY27E EBITDA by ~19%, factoring in healthy revenues and cost discipline, while broadly maintaining our FY28 estimates. We continue to value UTCEM at 18x Mar-28E EV/EBITDA with an unchanged TP of Rs13,000; maintain BUY.

Robust volumes, pricing, and disciplined costs paint a healthy picture

UTCEM (consolidated) delivered robust revenue growth of ~16% yoy (down ~4.5% qoq) to ~Rs246bn, driven by 12% yoy volume growth to >41mt (implying market share gains) and ~3.5% rise (both yoy and qoq) in blended realization. The company displayed tight control over costs, as unit variable cost rose <3% (~Rs105/t), both yoy and qoq. Unit logistics cost was flat, also both yoy and qoq, as lower distance (down 8/7km yoy/qoq) offset higher diesel prices. Fixed cost/t increased 8%/14% yoy/qoq, primarily due to higher packing material cost. The management is confident of limiting the rise in unit operating cost to Rs130-140/t (qoq) in 2QFY27, on the back of strong operating leverage coming into play. As the realization gain outpaced the cost increase, EBITDA/t rose ~1% yoy to Rs1,214 (down ~3% qoq), and EBITDA came in at ~Rs50bn (up ~14% yoy). UTCEM is targeting EBITDA of Rs1,400/ton by 4QFY28, contingent on a stable environment. PAT stood at ~Rs26bn, up ~17% yoy

Marching toward 240mtpa, with a resilient balance sheet

UTCEM stays steadfast on reaching >240mtpa by FY28 (capex of Rs180bn over FY27- 28), funded via internal accruals, given robust operating cash flow generation. With Phase-IV expansion underway, we maintain a positive stance, led by

1) its commitment to deliver >Rs300/t of operational cost savings organically (Rs185/t achieved by FY26)

2) a visible turnaround in acquired entities (ICEM/Kesoram), now that brand transitions are complete and cost-benefit accrual becomes visible in FY27 (ICEM reported EBITDA/t of ~Rs600 vs ~Rs500 qoq and ~Rs375 yoy)

3) a strong balance sheet, with net debt/EBITDA expected at ~0.6x by FY28E (vs 1x in FY26), allowing the company to grow faster than peers and strengthen its limestone bank under the 2030 auctions.

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