UltraTech Cement, the largest domestic player and one of the largest manufacturers globally, has recently brought on stream an additional 8.7 million tonnes of cement capacity in the peak construction season. This takes its total local cement capacity to 200.1 million tonnes. The Aditya Birla-controlled company had ended FY25 with a capacity of nearly 188.8 million tonnes, according to its Corporate Dossier dated 5 February, 2026.
Capacity Expansion vs. Margin Pressure
This capacity expansion comes at a time when investors on Dalal Street have been cautious on cement stocks , given rising input costs emanating from the Middle East crisis and fears that cement prices have not risen sufficiently in the March 2026 quarter.
The UltraTech Cement stock was broadly flat at Rs 11,907 in late Monday trade, and has corrected nearly 9% from its 52-week high of Rs 13,104 that was reached on 10 February, 2026. The broader BSE Sensex has dropped nearly 6% during the above period.
UltraTech Cement – managing rising input costs amidst Gulf war
Here’s a look at how UltraTech has been managing costs.
UltraTech Cement – key operational costs on per tonne basis in Q3FY26
| Standalone operational costs | Percent change (y-o-y) |
| Power and fuel expenses (per tonne basis) | Fall of 15% |
| Freight and forwarding expenses (per tonne basis) | Fall of 7% |
The US/Israel – Iran war has resulted in a higher cost structure for the broader cement sector, and investors are closely watching how leading players like UltraTech Cement are managing this problem
For instance, key input costs, like spot international pet coke prices have risen nearly 20% over the past few weeks to $153 per tonne levels, given global supply constraints and higher shipping freight costs.
Higher pet coke prices are expected to push up key input costs for cement companies, power and fuel expenses. However, UltraTech Cement’s standalone power and fuel expenses had declined nearly 15% y-o-y to Rs 1,212 per tonne in the December 2025 quarter, and in its investor presentation for the quarter under review, the company highlighted that green / renewable power accounted for nearly 42.1% of its total power requirements.
Also, a cause for concern for investors is that diesel prices have been recently raised in the country, given the turmoil in the Middle East, and that is expected to push up freight and forwarding expenses for this Aditya Birla-controlled cement company in Q4FY26.
UltraTech Cement’s standalone freight and forwarding expenses declined nearly 7% y-o-y to Rs 1,305 per tonne in the December 2025 quarter. The company had highlighted in its Q3FY26 presentation that it has reduced the distance travelled for its products in its distribution network, and that has helped to keep transport costs under check on a per tonne basis.
UltraTech is scheduled to declare its March 2026 quarter results on April 27, and it will provide greater insight on its ability to manage input costs.
Cement prices in the March 2026 quarter
Cement prices on all India basis averaged broadly between Rs 335 to Rs 340 per bag in the March 2026 quarter, as per various estimates, and realisations have barely risen on a y-o-y basis.
Industry sources highlight southern cement prices have shown an increase in Q4FY26, however, in western and northern regions realisations have been largely stable in the quarter under review.
Cement prices have not risen in the peak Q4FY26 on account of sluggish pace in implementation of construction projects. It is also understood that in several parts of the country, construction labour has returned to their home towns / villages during the recent Holi festival holidays, given shortage of petroleum products in the country and in turn affected cement demand.
The larger cement players, like UltraTech Cement, amongst others, are expected to manage a rising cost structure and broadly flat realisations in the March 2026 quarter, with a range of cost rationalisation measures, including increased use of green / renewable energy.
However, for smaller cement players, the pressure on operating profit margins is expected to be visible in the March 2026 quarter.
Now, let’s turn our attention to the valuation of these cement companies.
Valuation Matrix: Is UltraTech the best value play among peers?
Let’s take a look at the valuations of the various cement companies.
Peer Comparison: P/E Ratios across Cement Majors
| Cement Company | Consolidated P/E |
| UltraTech Cement | 44.9 |
| Dalmia Bharat | 31.1 |
| Shree Cement | 51 |
| ACC (standalone) | 10.6 |
UltraTech Cement trades at a consolidated P/E of 44.9 times, and over the past 5 years, it has traded between 20.8 times and 59.5 times.
Meanwhile, Dalmia Bharat trades at a consolidated P/E of 31.1 times, and over the past 5 years, it has traded between 22.6 times and 63.9 times.
Shree Cement trades at a consolidated P/E of 51 times, and over the past 5 years, it has traded between 27.9 times and 101.2 times.
ACC trades at a standalone P/E of 10.6 times, and over the past 5 years, it has traded between 10.6 times and 58 times.
An alternate method to value cement companies is EV per tonne. Here’s how these companies stand on that parameter.
An alternate valuation metric
UltraTech Cement, on the preferred valuation metric, enterprise value (EV) per tonne, trades at nearly $ 200 per tonne on a standalone basis (excluding its overseas operations). Its nearest rival, the Adani’s cement business, with a capacity of nearly 109 million tonnes at the end of the December 2025 quarter, trades at nearly $ 115 per tonne.
Other leading players, like Shree Cement, which had nearly 65.8 million tonnes of cement capacity at the end of Q3FY26, trades at nearly $ 150 per tonne.
Meanwhile, Dalmia Bharat, which had nearly 49.5 million tonne cement capacity at the end of December 2025 quarter, trades at nearly $ 85 per tonne.
UltraTech Cement appears to have factored in the growth opportunities over the next few quarters. Investors can closely monitor whether UltraTech Cement and other leading players are able to manage the input cost pressure emanating from the Middle East crisis and the sluggish trend in construction projects across the country even in the peak season.
Given all that is happening at UltraTech and the cement sector, it may be a good idea to add the stock to your watchlist.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
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