Cementing India's Future: Ultratech's and Ambuja's Growth Outlook

India’s two largest cement companies viz Ultratech Cement (UTCEM) & Ambuja Cements (ACEM) recently released their Q4 & FY25 financial results. While the headline numbers are widely known, here’s a quick comparison of the operational metrics for Q4FY25:

A deeper analysis of their earnings calls reveals key insights into the strategies and market outlook for these industry giants.

Key Highlights from Earnings Call –

Let’s look at the pricing & demand outlook in a slightly more detailed manner –

Pricing

Both companies have witnessed price improvements in the South & expect other regions to follow suit. We, at InCred, did our own channel checks which indicate –

• South: Witnessed two consecutive price hikes within a month (Rs40-50/bag followed by Rs5-10/bag), driven by regional players prioritizing profitability, after exit of major South players (acq. of India Cements, Penna Cements, Orient Cement).

  • Spot cement prices stood at Rs365/bag in Hyderabad and at Rs385/bag in Bengaluru.

  • Channels expect an additional price hike of Rs5-10/bag in May 2025

• East: Gradual increase in prices from Jan 2025, with significant hikes in Apr 2025.

  • Jharkhand and Bihar saw a hike of Rs15-20/bag while West Bengal recorded a modest hike of Rs4-5/bag.

  • Dealers expect a price hike in May 2025F.

• North: Most markets expect New Delhi and Rajasthan to witness reduced demand due to the heatwave, leading to a dip of Rs5- 10/bag.

  • A price hike of Rs10-15/bag is likely in May 2025F

• West: Prices in Mumbai were stable, but Ahmedabad saw a dip of Rs4-5/bag, while Nagpur recorded a rise of Rs10-15/bag in Apr 2025.

  • Excluding Ahmedabad, most markets expect a price hike of Rs4-5/bag in May 2025F

• Central: Prices in major markets like Varanasi, Prayagraj, Lucknow, and Bhopal remained flat MoM.

  • Dealers expect a price hike of Rs10-20/bag in May 2025F.

Price improvement in Apr-25 across regions –

Source: InCred Research

Demand

Our channel checks indicate that North, East, and Central region demands were impacted by heatwave, while demand in the South and West regions remained soft. Improved housing demand expected in the Western region ahead of monsoons.

Both companies expect an uptick in overall demand on the back of increased government spending during the year. Government estimates on overall capex, housing, and road construction broadly concur with that view; however, execution remains key.

Trends in overall capital expenditure by the government –

Source: Ministry of Statistics & Program Implementation

PM Awas Yojana spends expected to meaningfully increase in FY26 to INR 780 bn (from INR 475 bn in FY25RE)

Source: Ministry of Statistics & Program Implementation

While road construction spends remained subdued in FY25, increased spending expected in FY26 to INR 190bn (from INR 145bn in FY25RE)

Source: Ministry of Statistics & Program Implementation

Focus Areas

Similarities: 1) Ramp up acquired assets. 2) Cost control measures via increasing green energy share in total power mix and optimizing logistics. And 3) Both remain PAN India player within Tier “A” cement category (brand).

Differences: UTCEM is channelling its efforts into capacity expansion through strategic investments with the aim of reaching profitability of acquired assets to reach at the parent level in the medium term, whereas ACEM is focusing on organic growth, cost optimisation through various initiatives and achieving its ESG targets.

Which Giant is a better pick? Is there an investor favourite?

While both companies share a similar outlook on demand and pricing trends, and their strategies are generally aligned, there are a few key differences worth considering. First, Ultratech's aggressive expansion strategy stands in contrast to Ambuja's focus on organic growth and its shift towards prioritizing ESG-driven initiatives. Second, Ultratech is concentrating on improving the profitability with market share gain of its acquired assets, while Ambuja’s strategy centres around growing its organic market share. Additionally, Ultratech has demonstrated a strong track record of generating free cash flows and reducing its balance sheet leverage during the period. Given these differences, it’s worth questioning whether these varying approaches could influence the companies’ long-term positioning. Could one strategy provide a clearer advantage over the other, or is the impact of these differing approaches likely to be more nuanced?

Let’s look at a quick headline comparison –

*InCred Research

Stock price performance for last ten years, with base year as 2015 –

Source: Bloomberg

Mutual funds appear to favour UTCEM, with top holders increasing stakes, while reducing exposure to ACEM.

Holdings and change in shares as of Mar’25 –

Source: AMFI

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Both Ultratech and Ambuja are addressing market challenges with their own strategies. Ultratech’s aggressive expansion and investment approach contrasts with Ambuja’s focus on ESG principles and organic growth. Each company possesses its own strengths to capture profitable market share in its unique way. Investors seeking strong returns driven by earnings growth may find Ultratech to be better positioned, while those who prioritize market share expansion and sustainability may lean towards Ambuja. Ultimately, the evolving market dynamics will play a crucial role in shaping their future paths and determining which strategy proves most successful in the long run.