Why UltraTech Cement is near its 52-week low despite 25.2% profit growth

The second quarter of the financial year is the monsoon season across most parts of the country, and demand from key user industry, construction and infrastructure sector is sluggish. The ₹1,344/Tonne Squeeze: How Middle East Freight Rates Derailed Q2 Power Costs Ultratech’s key power and fuel expenses grew nearly 9.8% y-o-y to Rs 1,344 per tonne on a standalone basis in the quarter, and that’s despite renewable energy accounting for 25.1% of its power mix as compared to 21.1% a year earlier.

The company has highlighted the lower cost captive thermal power was 31.4% of the power mix as compared to 36.8% a year earlier. FE Stock Insights on WhatsApPGet instant alerts on high-conviction investment themes and fundamental deep dives—direct from Financial Express.Join now Power costs have shown an upward trend given the rising cost of pet coke, given surging freight rates emanating from the Middle East crisis.

Another key cost, freight and forwarding expenses also increased nearly 6% y-o-y to Rs 1,317 per tonne in the quarter, given the earlier hikes in retail diesel prices made by oil marketing companies. The company has also highlighted higher packing bag cost, given surging global crude oil prices and the resulting increase in costs. To minimize the impact of higher fuel prices, the company has highlighted that it has reduced the lead distance of 8 km y-o-y in its distribution network on a pan India basis in the quarter.

UltraTech Cement – operational parameters on a per tonne basis in Q2FY27 Standalone operational costsPer cent change (y-o-y)Power and fuel expenses (per tonne basis)Rise of 9.8%Freight and forwarding expenses ( per tonne basis)Rise of 6.0%Core operating profit (per tonne basis) Rise of 4.8% Source – Quarterly results and investor presentation of UltraTech Cement The Margin Squeeze: Why an 8.8% Price Hike Wasn't Enough UltraTech Cement is an all-India player, and its realisations grew nearly 8.8% y-o-y to Rs 6,151 per tonne in the quarter.

The southern regions saw the highest prices, given strong activities in several states. The company has highlighted in southern states commercial, housing and rural demand registered overall growth in the quarter. However, cement manufacturers have only partially passed on higher input costs to key user industries in the quarter. As a result, the company’s core operating profit margin declined 50 basis points y-o-y to 15% in the quarter.

2% y-o-y to Rs 1,331.8 crore in the quarter. The company’s standalone results reflect its core domestic operations. Will RBI Rate Hikes Blunt the Peak Season Rebound? The monsoon season is over in most parts of the country, and peak construction season has started. However, the RBI had recently raised interest rates by 0.25% in its October 2026 policy meeting. As a result, the impact of higher interest rates on industries like infrastructure and housing will be closely monitored, and the consequent demand for cement.

In addition, investors will continue to monitor the impact of the Middle East on the cement industry – whether leading cement manufacturers are able to fully pass on higher input costs to user industries, going forward. The company’s domestic cement capacity is expected to reach 207.7 million tonnes by the end of FY27 from 191.4 million tonnes at the end of FY26. The company has also brought on stream its cables and wires business in the second quarter of FY27, and it is expected to gain in traction over the next few quarters.

Capital Efficiency: Maintaining a Double-Digit ROE Edge Over Peers UltraTech Cement has a consolidated Return on Equity of 11.1%. It is 7.5% for Shree Cement and 6.1% for Dalmia Bharat. Return on Equity – UltraTech Cement v/s rivals Cement companyConsolidated Return on Equity (%) UltraTech Cement11.1%Shree Cement7.5%Dalmia Bharat6.1% Source – Screener.in Valuation Check: Does a 35.2 P/E Fully Factor in the FY27 Expansion?

UltraTech Cement declared its results during Monday trade, and the stock ended 2.8% lower at Rs 10,620. Investors were disappointed with the fall in operating margins for the company. The stock is hovering above its 52-week low of Rs 10,329 that was reached on 23 March, 2026. 2, and over the past 5 years, it has traded between 20.8 times and 60.7 times. Valuations of UltraTech Cement versus its peers Cement companyConsolidated P/EUltraTech Cement 35.2Shree Cement 49.4Dalmia Bharat 27.7 Source – Screener.in Smaller rival, Shree Cement trades at a P/E of 49.4, and over the past 5 years, it has traded between 27.9 times and 101.6 times.

It had a capacity of nearly 69.3 million tonnes at the end of FY26 Dalmia Bharat trades at a consolidated P/E of 27.7, and over the past 5 years, it has traded between 22.7 times and 64 times. It had a cement capacity of nearly 54.7 million tonnes at the end of the June 2026 quarter. UltraTech Cement’s valuations broadly factor in the growth prospects for the company over the next few quarters. Investors could put UltraTech Cement on their watch list of stocks for 2026, and see if performance matches expectations, going forward.

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