- You could capture a 20%+ upside as UltraTech’s market share climbs to 32% by FY28.
- Capacity additions will deliver ~INR300‑350/tonne cost savings, expanding OPM to ~21%.
- EBITDA CAGR of ~18% and RoE moving to 14% signal a stronger balance sheet.
- Valuation at 19x FY28E EV/EBITDA implies a target of INR15,000 – a ~30% premium to current levels.
You’ve been overlooking UltraTech Cement’s growth engine, and it’s about to explode.
Why UltraTech Cement’s Capacity Expansion Beats Industry Trends
UltraTech has already lifted its domestic grey‑cement capacity from 191.4 mtpa to a planned 235.4 mtpa by FY28 – a 23% jump. That alone accounts for roughly 28% of the incremental industry capacity announced for FY26‑28. Historically, capacity expansions in the cement sector are capital‑intensive and often lead to over‑capacity, but UltraTech’s disciplined capex and focus on high‑margin regions mitigate that risk. By FY28, the company is projected to own about 32% of the Indian market, up from 28% today, giving it pricing power and economies of scale.
How UltraTech’s Cost‑Optimization Drives Margin Upside
The firm’s cost‑reduction roadmap targets three levers: reducing lead distance (the distance between quarry and plant), improving clinker conversion ratio, and expanding the share of green power. In FY25, these initiatives saved INR86 per tonne; the target for FY26 is INR100 per tonne, with a medium‑term horizon of INR300‑350 per tonne. Those savings translate directly into a higher operating profit margin (OPM). Currently at ~19%, the OPM is expected to reach ~21% by FY28, outpacing the industry average of 17‑18%.
What the FY28 Earnings Forecast Means for Your Portfolio
Motilal Oswal projects a consolidated revenue CAGR of ~12% and a PAT (profit after tax) CAGR of ~22% for FY26‑28. The earnings boost stems from two pillars: a ~10% volume CAGR driven by robust demand in infrastructure and housing, and a 2‑percentage‑point OPM expansion. Return on Equity (RoE) is forecast to climb from ~11% in FY26E to ~14% in FY28E, while Return on Capital Employed (RoCE) should move from ~10% to ~13%. Those ratios are critical because they indicate how efficiently the company converts capital into earnings – a key metric for long‑term investors.
Competitive Landscape: UltraTech vs. Tata and Ambuja
While UltraTech is expanding, peers such as Tata Cement and Ambuja are also pursuing growth, but with different strategies. Tata focuses on overseas acquisitions and a balanced mix of grey and white cement, which dilutes its domestic market share gains. Ambuja’s growth is slower, with a heavier reliance on legacy assets. UltraTech’s aggressive domestic capacity build‑out, combined with its cost‑saving agenda, gives it a relative advantage in capturing the upcoming demand wave, especially in tier‑2 and tier‑3 cities where infrastructure projects are accelerating.
Historical Parallel: Cement Consolidation Waves in the 2000s
India’s cement sector saw a major consolidation in the early 2000s when ACC and Binani merged, leading to a temporary dip in margins before scale efficiencies kicked in. The lesson: well‑executed integration can turn short‑term pain into long‑term profit expansion. UltraTech’s integration of Kesoram and ICEM is already showing brand transition success and operational synergies, mirroring the positive outcomes of that earlier wave.
Investor Playbook: Bull and Bear Cases
Bull Case: Capacity expansion proceeds on schedule, cost‑saving targets are met, and demand from government infrastructure programs exceeds expectations. EBITDA multiples stay at 19‑20x, pushing the stock to the INR15,000 target – a ~30% upside from current levels.
Bear Case: Delays in green power procurement or unexpected raw‑material price spikes erode the projected cost savings. Over‑capacity in the sector forces price wars, compressing margins below 18%. In this scenario, the stock could retrace to INR10,500, reflecting a 20% downside.
Overall, the balance of probabilities tilts toward the bull scenario, especially given UltraTech’s track record of delivering on capacity and efficiency milestones.