The brokerage firm Nuvama Institutional Equities has maintained a ‘Hold’ rating on UltraTech Cement. The brokerage has set a target price of Rs 13,982 against the current market price of around Rs 12,370. This implies an upside potential of nearly 13% from current levels.
According to the brokerage report, the cement major continues to post steady operational performance and remains focused on expansion, though rising costs and near-term pressures could limit immediate upside.
Let’s take a look at the three key reasons why Nuvama continues to maintain a ‘Hold’ rating on UltraTech Cement despite its strong fundamentals and steady growth outlook.
Nuvama on UltraTech Cement: Volume growth steady, but margins under pressure
UltraTech Cement delivered a 7% year-on-year growth in consolidated volumes during Q2FY26. This was driven by strong demand momentum, according to Nuvama. However, realisations saw some pressure, with domestic grey cement prices dipping 1.4% sequentially.
The report added that “reported power cost per tonne increased 5% QoQ (but dipped 8% YoY), fuel cost/t rose 3% QoQ, and raw material cost/t climbed 5% QoQ/YoY.” Despite these pressures, freight cost per tonne eased by 2% sequentially due to reduced lead distance.
“Consolidated EBITDA per tonne stood at Rs 914,” the brokerage noted, indicating that cost pressures offset some of the benefits of volume gains.
Nuvama on UltraTech Cement: Expansion plans to power long-term growth
UltraTech continues to strengthen its leadership in the cement sector with aggressive capacity expansion.
As per the brokerage report, the company’s total capacity is set to increase from 183 million tonnes in FY25 to about 213 million tonnes by FY27, supported by ongoing brownfield projects.
Nuvama highlighted that “Management unveiled their Phase IV expansion plan of 22.8 million tonnes of cement capacity, including 18 million tonnes in the North and 4.8 million tonnes in the West.”
The brokerage added that the company plans to invest around Rs 10,000 crore for this phase, largely funded through internal accruals. “Net debt-to-EBITDA is likely to remain below 0.7x, while capacity utilisation ratio shall reach 1.6x at the end of this expansion,” said the report.
Nuvama on UltraTech Cement: Q2 highlights – Prices steady, green energy focus rising
In its post-earnings commentary, Nuvama highlighted several takeaways from UltraTech’s Q2FY26 management call. According to the brokerage, “Industry volumes grew 4.5–5% in Q2FY26 and are anticipated to grow 6–7% in FY26E. Cement prices are holding steady,” suggesting stable demand ahead.
The company also continues to improve sustainability metrics. “Green power mix constituted 41.6% in Q2FY26,” Nuvama quoted management as saying. Other operational metrics also reflected efficiency gains, “Clinker conversion ratio stood at 1.48x, down from 1.45x last year, and lead distance improved to 366 km from 388 km in Q2FY25.”
On the cost front, management highlighted that “removal of cess on coal shall benefit UltraTech the most in the industry,” given its scale and high fuel usage.
