UltraTech’s board approves ₹13,000 cr capex for capacity expansion; stock rises 2%

Shares of UltraTech Cement jumped nearly 2% in early trade on Monday after its board approved fresh investment of ₹13,000 crore for capacity expansion in India. The flagship company of the Aditya Birla Group proposes to increase its cement capacity by another 21.9 million tonnes per annum (MTPA) with a mix of brown field and green field projects, as per the exchange filing.

Boosted by the capital expenditure (capex) plan, shares of UltraTech Cement rose as much as 1.8% to ₹8,355, while the market capitalisation climbed to ₹2.41 lakh crore. Early today, the stock opened higher for the second straight session at ₹8,282.80 against the previous closing price of ₹8,206.65 on the BSE.

UltraTech Cement shares have given 23.5% returns in the last one year; 18% in the calendar year 2023; and 11% in six months. The country’s largest cement producer has given flat returns in the last one month, while it shed over 2% in a week.

In an exchange filing on October 28, UltraTech Cement said, “The Board of Directors at its meeting held today, approved the 3rd phase of growth with an investment of ₹13,000 crore towards increasing the capacity by another 21.9 MTPA with a mix of brown field and green field projects.”

As per the company, post commissioning of the third phase of expansion, UltraTech will be strongly placed across the country with 35.5 MTPA in South; 40.4 MTPA in East; 36.2 MTPA in North; 35.7 MTPA in Central; and 33.8 MTPA in the West. “This will be achieved by setting up 4 greenfield and 4 brownfield plants along with 4 greenfield bulk terminals,” it said.

Commercial production from these new capacities is expected to go on stream in a phased manner from FY26 onwards and will catapult the company’s cement capacity to 187 MTPA globally, the release noted.

Kumar Mangalam Birla, Chairman, Aditya Birla Group, said, “Over the past seven years, UltraTech has strategically invested over ₹50,000 crore to support India's rapidly changing infrastructure landscape. Our fresh commitment of ₹13,000 crore underscores our deep-rooted belief in India's economic potential. With each investment, we have not only expanded our footprint but also powered India’s needs for housing, roads, and other vital infrastructure”.

“Earlier this year, I had articulated our ambition to reach a capacity of 200 MTPA, and this expansion marks a pivotal step in that direction. With this round of capex UltraTech reinforces its position as one of the largest cement companies in the world and a national champion,” he added.

The cement major also highlighted that there would be “no investment in thermal power capacity, keeping in line with the COMPANY’S mission to reduce carbon emissions”. The expansion also includes investments in setting up additional 39 MW waste heat recovery systems (WHRS) capacity at a cost of ₹453 crore and ₹180 crore towards alternative fuel feeding and handling equipment contributing towards the company’s commitment to reduce carbon emissions.

The company will use green energy in excess of 60% by the end of 2027. This will be supported by a total WHRS capacity of over 400 MW and renewable energy of approximately 1.5 GW, UltraTech said in the release.

The development came two week after the company reported a 68.7% year-on-year (YoY) increase in its profit to ₹1,280.38 crore in the second quarter ended September 30, 2023. The revenue from operation jumped 15% YoY to ₹16,012 crore, while EBITDA rose to ₹2,718 crore, as against ₹2,013 crore in the same period last year. In Q2 FY24, sales volume grew 15% YoY to 25.08 million tonnes unit. 

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