🧾 At a Glance

India’s largest cement company, UltraTech Cement has doubled down on capex, acquisitions, and ambition. From buying Binani to eating Kesoram, it’s in full “national domination” mode. But while sales hit ₹75,955 Cr in FY25, net profit has barely moved in 5 years. All that dust, but where’s the rally?

🏗️ 1. Business Model: Cement, Concrete, and Corporate Combos

UltraTech isn’t just a cement company. It’s an empire.

• 🏭 Grey Cement (core business): 22% market share across India
• 🧱 RMC (Ready-Mix Concrete): Strong presence in urban construction
• 🌱 White Cement & Wall Care Putty: Through subsidiary Birla White
• 🌍 Overseas Ops: Sri Lanka, UAE, Bahrain, Bangladesh – mostly cement exports

But 90%+ of the revenue still comes from good old cement bags. In a country where housing, infra, and weddings all demand cement, UltraTech is the mafia don of sacks.

📈 2. Financial Performance: Volume Up, Value… Not So Much

🎯 Sales up almost 80%, but profits? Barely moved. Why?

• 🔥 Input inflation (coal, pet coke, diesel)
• 🧱 Aggressive expansion = depreciation pain
• 🧾 Interest cost spiked post Kesoram deal + ₹30,000 Cr capex cycle
• 📉 Margin dilution from newer low-margin markets (East, Central)

🧠 3. Management: Kumar Mangalam Birla’s Concrete Ambition

• Chairman: Kumar Mangalam Birla – plays Monopoly with cement companies
• Promoter Holding: ~59.2% as of Mar 2025
• Major Moves:
  • Acquired Kesoram Cement (2024)
  • Set up greenfield units in Rajasthan, Chhattisgarh, and Odisha
  • Announced plans to reach 200 MTPA capacity by FY27

UltraTech is betting big on scale > margins. It’s a classic “build now, harvest later” story. The only issue? Investors are getting impatient waiting for the harvest.

📊 4. Quarterly Trends: Demand Builds, Margins Crack

Yes, margin is improving post FY23. But overall, UltraTech’s OPM is still 5% lower than FY21 levels. It’s not about demand — India’s building. It’s about cost pressure + amortization.

📉 5. Stock: Sky-High Price, Cemented Valuation?

📦 For context, Ambuja Cements trades at 31x P/E, ACC at just 15x. Even Shree Cement, often more premium, trades at 94x but with leaner asset base.

UltraTech is a monopoly cement stock with a monopoly P/E, but the earnings don’t justify it yet.

📐 6. Valuation: What’s a Fair Price for a 9% ROE Cement Giant?

Let’s break it:

• EPS (FY25): ₹204.94
• Reasonable P/E Range (given leadership, scale): 25–30x
• 🎯 Fair Value = ₹5,100 to ₹6,150

Current price of ₹11,420 = “already priced in India’s entire infra budget”.

You’re basically paying for cement 5 years in advance and hoping roads get built faster than reality permits.

⚠️ 7. Risks

• ❌ Massive capex = debt spike
• ❌ Low ROE (9%) and ROCE (11%) despite leadership
• ❌ Cyclical sector, vulnerable to monsoons and housing slowdown
• ❌ Government price controls in infra projects

🧲 8. EduInvestor Verdict: India’s Cement King, But Growth’s Still Setting

UltraTech Cement is a beast. But even beasts need digestion time.

• ✅ Industry leader
• ✅ Huge demand tailwinds (housing, roads, PMAY, smart cities)
• ✅ Best-in-class supply chain

But…

• ❌ Profit growth is not catching up with capex
• ❌ ROE is cemented in single digits
• ❌ Stock is trading like a tech company, not a cyclical one

EduInvestor says: Great company, but this valuation? Too Ultra, Not Enough Tech.

🏷️ Tags

UltraTech Cement, cement stocks India, Aditya Birla Group, UltraTech vs Ambuja, Kesoram Cement acquisition, cement industry growth, construction materials India, high PE stocks, UltraTech fair value, Birla stock analysis, infra theme stocks, cement stock bubble

✍️ Written by Prashant | 📅 June 20, 2025