UltraTech Cement Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Amit Murarka - Axis Capital Limited - Analyst : (inaudible) for the opportunity. So the first question is on the fuel cost. So you had guided for a normalization of fuel cost by the Q3, and it's good to see your sharp drop in Q2 itself. So could you help understand, like, in Q3 or by Q4, what could be the expected fuel cost when you kind of normalize back to the spot cost level?

Question: Amit Murarka - Axis Capital Limited - Analyst : And also, on your cost, so I see that there's a sharp jump in employee costs. I know you do annual increments from Q2, but it's almost a 24% QoQ

Question: Amit Murarka - Axis Capital Limited - Analyst : Okay. And asking on other expenses as well, like last quarter, you had said that you had higher marketing spend. But the other expenses, at least, on a per-tonne basis have gone up another INR100. So how do we think about other expenses now?

Question: Amit Murarka - Axis Capital Limited - Analyst : Sir, I know. But I heard that Q1 was a bit elevated because of some one-off marketing spend so --

Question: Amit Murarka - Axis Capital Limited - Analyst : Thanks, I'll come back in the queue here.

Question: Raashi Chopra - Citi - Analyst : Thank you. So could you just tell us a little bit on pricing in the sense that, what's happened after the quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Raashi Chopra - Citi - Analyst : And on average versus the 2Q?

Question: Raashi Chopra - Citi - Analyst : Got it. Thank you. And in this quarter, the other operating income seems to have moved up sequentially. What is that attributed to?

Question: Raashi Chopra - Citi - Analyst : Okay. So this should continue?

Question: Raashi Chopra - Citi - Analyst : Okay. And on the last question, on India Cements, the CCI approval is awaited. Is there any sort of delay, or I mean, we (multiple speakers) --?

Question: Raashi Chopra - Citi - Analyst : So likely closure within this fiscal? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Raashi Chopra - Citi - Analyst : Okay. Thank you.

Question: Prateek Kumar - Jefferies India Private Limited - Analyst : Yeah. Good evening, sir. My first question is on pricing versus -- or profitability versus volumes. So our current quarter's EBITDA per tonne is like sort of probably four, five years low on a quarterly basis at least. So is there a point where you as a company or industry, probably, like look at the profitability versus volumes, or how should we look at going forward?

Question: Prateek Kumar - Jefferies India Private Limited - Analyst : Yeah, of course, growth will be in the profitability. But like your whole cost-saving initiative, industry cost, [payable] cost coming down seems to already more than passed to the consumer. Historically, we have, as an industry, like looked at better profits generally. Seems there is a significant deviation from there. And even for second half, not sure how much EBITDA per tonne we are looking for improvement overall. But maybe a related question, like, if there is a prolonged slowdown in demand, do we really look at our organic expansion funds at all? Or like, how should we look at capacity expense (multiple speakers) --?

Question: Prateek Kumar - Jefferies India Private Limited - Analyst : Okay. And then the other question is on white segment revenues, which is sort of slipped 10% year on year this quarter. Any specific reason there?

Question: Prateek Kumar - Jefferies India Private Limited - Analyst : The white segment revenues was like lower year on year by --

Question: Prateek Kumar - Jefferies India Private Limited - Analyst : Okay. Is that continuing, or like, they're expected to revive?

Question: Prateek Kumar - Jefferies India Private Limited - Analyst : Thank you. I'll get back to queue.

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : Hi, thank you for taking my question. Atul, sir, I have one broad question which may not be a near-term thing. Just want to understand one thing. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call You have been continuously surprising positively on realization versus what we see on pan-India prices. If I look at -- if I compare numbers for the last quarter, your trade segment has not changed much. So what drives UltraTech's continued delivery on realization versus the industry, just to understand this better? Thank you.

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : Thank you, sir. So just a follow-up on this. Is it fair to say that apart from being a preferred brand or you being a pan-India player helps you push on some of the regional disturbances on prices? Or is it a more multiple --?

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : That's very clear, and thank you so much.

Question: Sumangal Nevatia - Kotak Securities - Analyst : Good evening, everyone. Thanks for the chance. Sir, my first question is on industry demand. Is it possible to share your sense what would have been the industry demand growth in second quarter? And in your presentation, we see a lot of down arrows across regions. Is it possible to give some color as to some regional color? And in our growth, I mean, it looks like we would have grown in some region and we would have seen some decline. So some region-wise color specifics will be very helpful, sir.

Question: Sumangal Nevatia - Kotak Securities - Analyst : Okay, okay. But, sir, east and south, I mean, there are a lot of down arrows. I mean, is it -- I mean a firm decline on our volumes in these two regions or --?

Question: Sumangal Nevatia - Kotak Securities - Analyst : Okay. Got it, got it. Sir, second question on the fuel cost versus what we are doing at around 1.85. I mean, I understand that trajectory is downwards and difficult to say -- guide on the timeline. But just for our understanding, at the spot level of pet coke, say, around $95-odd, what would be the cost? I mean, of course, timeline will depend on inventory. But some (technical difficulty)

Question: Sumangal Nevatia - Kotak Securities - Analyst : Okay, I understand, I understand. And just the last one. I mean, for India Cements, we are expecting the CCI by about November end or December. Any --?

Question: Sumangal Nevatia - Kotak Securities - Analyst : Okay. But based on the queries, do we see any risk or --?

Question: Sumangal Nevatia - Kotak Securities - Analyst : Understand. Got it, sir. That's all from my side. All the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Parth Bhavsar - Investec Bank (UK) Plc - Analyst : Hi, sir, thank you for the opportunity. Sir, I have one question. So we are adding approximately 15 million tonnes this year, and we have acquired Kesoram and India Cement. So going ahead in a situation where the demand is not strong, so would we go after market share gains? Or would we -- like, how would we go about the market share?

Question: Parth Bhavsar - Investec Bank (UK) Plc - Analyst : Okay. So you would, like, hold up your pricing, like, just in case, like, and you won't go after market share?

Question: Parth Bhavsar - Investec Bank (UK) Plc - Analyst : Okay, thank you so much, sir.

Question: Shravan Shah - Dolat Capital Market Pvt Ltd. - Analyst : Yeah. Sir, double-digit growth for us for H2 and for industry, how much we are looking at for H2? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Shravan Shah - Dolat Capital Market Pvt Ltd. - Analyst : Okay, okay. Got it. And is it possible, sir, in terms of the 68% utilization for second quarter, can you break it down region-wise for us? How was the utilization?

Question: Shravan Shah - Dolat Capital Market Pvt Ltd. - Analyst : Okay. And CapEx for full year now -- last time, we said INR8,000 cores to INR9,000 crores.

Question: Shravan Shah - Dolat Capital Market Pvt Ltd. - Analyst : For next year also, the similar run rate one can look at?

Question: Shravan Shah - Dolat Capital Market Pvt Ltd. - Analyst : Okay. And in terms of the cost saving that, previously, we have talked about, around INR300-odd per tonne, definitely, we have also given the -- in terms of the line item-wise. But how much we have already -- have achieved this year and next year possible, if you can say how much more cost reduction from here on we can look at?

Question: Shravan Shah - Dolat Capital Market Pvt Ltd. - Analyst : Okay, okay. Thank you, sir, and all the best.

Question: Navin Sahadeo - ICICI Securities Limited - Analyst : Yeah. Good evening, sir, and thank you for the opportunity. Two questions. So while we are awaiting regulatory clearances at both Kesoram and Indian Cements deal, is there any initial assessment done as to the CapEx that may be required at both these entities to bring the quality of the plants at par to our operating standards?

Question: Navin Sahadeo - ICICI Securities Limited - Analyst : Understood. And I'm assuming that the yearly targets that you have given -- and thank you so much for giving that because it gives us more conviction to build in that -- those kind of cost savings. So the yearly targets that you have given for waste heat recoveries, I'm assuming they are not --

Question: Navin Sahadeo - ICICI Securities Limited - Analyst : Understood, understood. And sir, second is just a clarification. Did you mention that the current pet coke -- the current low levels of pet coke prices, not much transactions are happening?

Question: Navin Sahadeo - ICICI Securities Limited - Analyst : So is it because the seller is not willing to, or we are expecting further decline? How should one look at it?

Question: Navin Sahadeo - ICICI Securities Limited - Analyst : That's very, very helpful. Thank you so much.

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Hi, sir. Thanks for the opportunity. A couple of questions. Sir, first, at industry-wide, what is the sort of capacity additions that you are expecting, say, this fiscal and next two fiscals?

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Sir, earlier, you had given a number of 35 million to 40 million. So is it a few companies are scaling back? To your knowledge, how should one read into this?

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Okay.

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Okay, that's helpful. Sir, my second question is, you have indicated on sustainability bond, I think the prior one, the coupon was at around 2.8. Is it possible that you can break up that number of less than 7.25 into hedging cost and the actual coupon?

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Sir, I could not hear, sorry. Unidentified Company Representative So the spread, including the [SOFR], is around 4%. The hedging cost is around 3%.

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Yes.

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Yes, sir. Sir, last question. You emphasized a lot on cost. My basic question was, do you consider discount as a cost? And the reason to ask is, if I look at the number, over a five-year CAGR, the number has increased very, very steeply at almost 19% CAGR, which probably is a reflection of competitive intensity in the marketplace. Sir, any thoughts on this particular variable, and would you not consider it as a cost as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Ritesh Shah - Investec Bank (UK) Plc - Analyst : Sure, sir. I'll connect with you on this separately. Thank you so much for the answers. Thank you.

Question: Sanjay Nandi - VT Capital Market Private Limited - Analyst : Hello, hello?

Question: Sanjay Nandi - VT Capital Market Private Limited - Analyst : Yeah, thank you for the opportunity, sir. Sir, can you please share the general utilization for our company across different regions?

Question: Sanjay Nandi - VT Capital Market Private Limited - Analyst : Okay. Got it. And what has been the clinker utilization for our company for this quarter, sir?

Question: Sanjay Nandi - VT Capital Market Private Limited - Analyst : Okay, sir. That's it from my side. I'll come back in the queue, sir. Wish you a very happy Diwali in advance.

Question: Sukant Kirk - Equibil Research - Analyst : Hi. Sir, my question is regarding guidance on the further acquisitions that the company is in plan with. So after India Cements, what kind of acquisitions the company is looking into as of now?

Question: Sukant Kirk - Equibil Research - Analyst : No. I mean to say, are there any in the pipeline as of now currently?

Question: Sukant Kirk - Equibil Research - Analyst : Okay, okay. (inaudible) Thank you. My most of the questions -- answered again. Thanks.

Question: Prateek Maheshwari - HSBC - Analyst : Thank you for the opportunity, sir. Sir, just wanted to ask you if there is anything to call out in your cash conversion. So I just saw that year versus last year, your cash conversion has dropped to 65%. And I think the main reason has been the decrease in your trade payables and other liabilities. So is it a seasonal thing, or is there any change in terms -- I just wanted to understand that.

Question: Prateek Maheshwari - HSBC - Analyst : And sir, anything on the trade payables' decline and the liability? We saw similar things, similar trend, with the other peer as well. Is it related to your fuel as well?

Question: Prateek Maheshwari - HSBC - Analyst : Okay. And sir, just wanted to understand the second-half demand driver. So would you see that the infra increasing, and so the non-trade share will increase?

Question: Prateek Maheshwari - HSBC - Analyst : So very similar to your 1H drivers in terms of trade, non-trade?

Question: Prateek Maheshwari - HSBC - Analyst : Okay. Got it, sir. Thank you so much for the opportunity. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Amit Murarka - Axis Capital Limited - Analyst : Hi. Thanks for the opportunity again. So given that we are very close to now Kesoram integration, could you provide a brief overview of 1H financials for Kesoram?

Question: Amit Murarka - Axis Capital Limited - Analyst : Yeah, but they didn't have the cement in that.

Question: Amit Murarka - Axis Capital Limited - Analyst : EBITDA per tonne was only 264.

Question: Amit Murarka - Axis Capital Limited - Analyst : Okay, okay. And also, what will be the rebranding strategy there now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Amit Murarka - Axis Capital Limited - Analyst : Sure. So I believe by Q3, I think we should be able to kind of include that in our numbers also?

Question: Amit Murarka - Axis Capital Limited - Analyst : Got it, got it. That's all I was asking for. Thank you.

Question: Rajesh Shaw - HDFC Securities - Analyst : Hi, sir. Good evening. My question pertains to the cement (inaudible) margins. If I look at the blended and reported number, 725, it's already multiyear low performance. If I exclude the contribution from RMC, white cement, and the other operating income, this number would be closer to INR600. So as an industry leader, if that is operating at, say, close to INR600, where do we see a bottom in terms of the pricing and -- because -- why I'm talking about this? Everyone, including you and other major players, they're all talking about INR200 to INR400 cost reduction happening over the next two years. In that context, what is the certainty of these prices recovering to a respective level of, say, the margins on the cement business tonnes up north of (inaudible)?

Question: Rajesh Shaw - HDFC Securities - Analyst : Anything between INR600 and INR650.

Question: Rajesh Shaw - HDFC Securities - Analyst : Correct, correct.

Question: Rajesh Shaw - HDFC Securities - Analyst : Agree. No, my point is, for you, you are one of the most efficient players with better brand positioning, if you have to update at such low levels, why should the prices not go up? And obviously, when you are giving those numbers, other will also be reporting similar numbers. So where we were looking at 1,300, 1,400 margin of the industry, how should that shape up?

Question: Rajesh Shaw - HDFC Securities - Analyst : Great, sir. That's all from my end. All the best.

Question: Jain Ashish - Macquarie Research - Analyst : Hi, sir, good evening. Sir, my first question is on your capacity addition. So while -- if I look at the regional breakup of the capacity addition, it's heavily skewed in favor of South and Eastern India. And some of the acquisitions, which you will do, which are not factored there, are also Southwest centric. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call How do you plan to grow market share or volumes in North and Central, where, I guess, you're operating at very high utilization? And not much capacity is there in terms of the current pipeline at least?

Question: Jain Ashish - Macquarie Research - Analyst : Sir, I completely get that. My only point was that, while we are getting balanced, the mix from a capacity point of view is, in my view, worsening. Because share of weaker profit markets are -- is actually going up based upon this number at least --

Question: Jain Ashish - Macquarie Research - Analyst : Got it, got it. Sir, secondly, some of the optimism you shared for, let's say, second-half profitability, is it fair to assume that a large part of it, if it comes through, will be price-led and normalization of seasonal costs. Because normalization of seasonal cost is well understood. Coal and all is not a major tailwind, I guess, from --

Question: Jain Ashish - Macquarie Research - Analyst : Right. Yeah, so basically, it's price-led, right? Because on the cost side --

Question: Jain Ashish - Macquarie Research - Analyst : Okay. Got it, got it. Thank you, sir. Thanks so much, and best of luck.

Question: Sanyam Chhangani - JPMorgan - Analyst : Hi. Am I on?

Question: Sanyam Chhangani - JPMorgan - Analyst : Yeah. Just wanted to ask whether -- what is the current limestone capacity for UltraTech? And like, do we -- what is the expiry schedule? Like, in the next two to five years, how many limestone is there to be expected?

Question: Sanyam Chhangani - JPMorgan - Analyst : Okay. So -- and what kind of bids do we expect to place in the coming two years to three years, let's say, for further additions in limestone reserves?

Question: Sanyam Chhangani - JPMorgan - Analyst : Okay.

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : Hi, thank you again. (inaudible)

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : Hello, can you hear me?

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : Sorry about it. Thank you for giving me a chance again. You mentioned that 30 million-tonne capacity would get added each in this year and next year. And you also mentioned that there have been some delays. I just want to understand, are there structural issues --?

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : No, I understand that. I'm asking more from the industry perspective. And the reason I ask this question is because if I look at industry outside large players, even normalized profitability levels would make almost impractical to add capacity. So does this mean that you will see accelerated market share gains even on organic capacity addition basis? Or how should we look at the industry dynamics from the next two, three years' perspective, given how profitability levels are? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : So let me ask the question differently, sir. Is there a risk that capacity expansion delays may happen structurally for the industry over the next two years?

Question: Rahul Gupta - Morgan Stanley India Company Pvt. Ltd. - Analyst : Okay, great. Thank you so much.

Question: Pulkit Patni - Goldman Sachs (Asia) L.L.C. - Analyst : Most of my questions are answered. If you could just give a sense for the first 20 days of October, what has been the kind of demand pickup that will be helpful for us to get confidence in the third-quarter demand number, please?

Question: Pulkit Patni - Goldman Sachs (Asia) L.L.C. - Analyst : Sure, sir. But the last couple of weeks will be impacted by Diwali. So it looks like it will be only post Diwali --

Question: Pulkit Patni - Goldman Sachs (Asia) L.L.C. - Analyst : Sure, sir. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 10:30AM, ULTC.NS - Q2 2025 UltraTech Cement Ltd Earnings Call

Question: Pulkit Patni - Goldman Sachs (Asia) L.L.C. - Analyst : Got it. Thank you, sir.

Question: Jashandeep Singh Chadha - Nomura - Analyst : Hello. Hi, sir. Thank you for the opportunity. Sir, most of my questions are answered. Just one question; before that, a clarification. You said that in this quarter, UltraTech also paid one-time bonuses over and above the usual bonus that you pay in the second quarter. And excluding that, the employee cost would have increased 10% quarter on quarter. Is that understanding right, sir?

Question: Jashandeep Singh Chadha - Nomura - Analyst : Okay. And sir, my question is largely on the Tamil Nadu limestone auction. Has there been any update? I mean so (inaudible).

Question: Jashandeep Singh Chadha - Nomura - Analyst : Thank you, sir. Most of my questions are answered. Thank you.