Ultratech: Dominant player in rural region

Ultratech Cement is the largest cement company in India and 3rd largest cement company in the world (ex-china). It is also the only cement producer outside of China to have 100+ MnTPA of manufacturing capacity in a single country.

UltraTech has a consolidated capacity of 119.95 Million Tonnes Per Annum (MTPA) of grey cement. UltraTech has 22 integrated manufacturing units, 27 grinding units, one clinkerisation unit, and 8 Bulk Packaging Terminals. 

UltraTech has a network of over one lakh channel partners across the country and has a market reach of more than 80% across India. In the white cement segment, UltraTech goes to market under the brand name Birla White. It has one White Cement unit and two Wall Care putty units, with a current capacity of 1.5 MTPA. With 150 Ready Mix Concrete (RMC) plants in 50 cities, UltraTech is the largest manufacturer of concrete in India. It also has a slew of specialty concretes that meet the specific needs of discerning customers. Its Building Products business is an innovation hub that offers an array of scientifically engineered products to cater to new-age constructions.

UltraTech Cement ranks way ahead of its peers, ACC and Ambuja Cement, across all fronts on the back of highly efficient operations and strong management quality, backed by aggressive capacity addition. UltraTech successfully integrated acquired operations of Century cement (14.6mnt), JP associate (22.4mnt), and Binani cement (6.3mnt) within a guided timeline and profitability plus has well-diversified capacity across regions.

UltraTech outperformed its peers on majority parameters including capacity expansion, shift to renewable energy, timely mergers & acquisitions, a balanced mix between non-trade and trade sales, timely project execution, high market share, etc. Company is continuously building capabilities to sustain the current performance through accelerated investment in mines & land (the most critical resource in India) and sizeable investments envisaged towards reducing freight cost.

UltraTech embarks on the next round of growth with 19.5mnt of new capacities to reach about 131mtpa by FY23 targeting to reach 22% market share. Along with it, a sizeable investment in high payback and environment-friendly renewable power (WHR) to increase its share to 34% by FY24 from the current 13% of overall power requirement would help to mitigate higher energy costs.

Led by its dominant size (20% market share) with the capacity of 114.6mtpa, strong balance sheet (Net debt/EBITDA at 0.5x), and highly efficient operations, the company stands out as the best candidate to play the recovery in the sector. The high share of trade volumes (64% in Q3FY22) and successful integration of acquired assets (Century cement, JP associate, and Binani cement) would provide sustainability to UltraTech’s margins. However, a near-term weakness is expected in the cement sector due to headwinds on margins coupled with an unabated increase in energy cost.