UltraTech’s Q2 margin drops 4.38 points sequentially
Year-on-year profit rose 21.28%, but higher interest and tax rates diluted the operating improvement.
Filed 19 Oct 2026, 13:45 IST · UltraTech Cement Ltd (ULTRACEMCO)
Key takeaways
- Consolidated operating margin fell 4.38 percentage points QoQ to 15.97% as revenue declined -5.49% while expenses slipped only -0.30%.
- Despite the sequential squeeze, YoY revenue grew +18.81% and net profit rose +21.28%, with operating margin up 0.19 percentage points.
- Interest expense rose +21.82% QoQ and the tax rate increased 1.88 percentage points, while other income accounted for 4.97% of pre-tax profit.
Price around the results
Sequential squeeze despite annual growth
UltraTech’s consolidated revenue fell -5.49% QoQ, while expenses declined only -0.30%, causing operating profit to drop -25.80%. On a YoY basis, revenue grew +18.81% and expenses rose +18.54%, allowing operating margin to improve by 0.19 percentage points and net profit to rise +21.28%.
Higher financing and tax costs added pressure
The sequential margin contraction reflects costs falling much more slowly than revenue, which cut operating margin by 4.38 percentage points. Interest expense increased +21.82% QoQ, while the tax rate rose 1.88 percentage points to 27.07%, further weighing on pre-tax profit conversion. Other income contributed 4.97% of pre-tax profit, so it was not a major support to earnings quality.
Margin has declined for two straight quarters
Operating margin fell from 21.71% in Q4FY26 to 20.35% in Q1FY27 and 15.97% in Q2FY27, making this the second consecutive quarterly decline after the Q4 peak. The margin matched the 15.97% median of the five Commodities peers that had reported and ranked third from the bottom.
Management flags regional disruptions and capacity additions
Management said infrastructure demand in the east was subdued by delayed fund flows, floods in Bihar and Assam, and a cyclone in Odisha; it also cited railway congestion near Lonavala and heavy rainfall in parts of Central India. Management said the Union Budget’s Rs 12.2 lakh crore FY27 capex allocation, with 42% spent by August 2026, was supporting cement demand from infrastructure, housing and industrial capex. The company said it plans to add 16.3 mtpa of cement capacity in FY27 and 29.8 mtpa in FY28.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹23,295 cr | ₹24,648 cr | -5.49% | +18.81% |
| Other income | ₹102 cr | ₹118 cr | -13.54% | -39.22% |
| Expenses | ₹19,574 cr | ₹19,633 cr | -0.30% | +18.54% |
| Operating profit | ₹3,721 cr | ₹5,015 cr | -25.80% | +20.26% |
| Operating margin (%) | 15.97% | 20.35% | — | — |
| Interest | ₹552 cr | ₹453 cr | +21.82% | +20.13% |
| Depreciation | ₹1,213 cr | ₹1,201 cr | +1.07% | +5.72% |
| Profit before tax | ₹2,059 cr | ₹3,480 cr | -40.85% | +24.32% |
| Tax | ₹557 cr | ₹877 cr | -36.44% | +33.35% |
| Net profit | ₹1,501 cr | ₹2,604 cr | -42.34% | +21.28% |
| EPS (₹) | ₹50.78 | ₹88.36 | -42.53% | +21.28% |
Operating margin of 15.97% compares with a Commodities sector median of 15.97% across 5 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company cites continued cement demand from infrastructure, housing and industrial capex, supported by the Union Budget’s FY27 capex allocation.
Expansion
- The company plans to add 16.3 mtpa of cement capacity in FY27.
- The company plans to add 29.8 mtpa of cement capacity in FY28.
- Ultravolt’s committed or spent capex has reached approximately Rs. 1,100 crore.
New initiatives
- The company launched Ultravolt on 3 September 2026.
- The company is adding more than 600 electric trucks to its logistics operations by December 2026.
- Kukurdih Cement Works now meets all its electricity needs from green power.
Competition
- Ultravolt describes itself as the second-largest player in the industry by installed copper capacity.
Problems & risks
- East infrastructure demand was subdued because of delayed fund flows, floods in Bihar and Assam, and a cyclone in Odisha.
- Aggregate shortages and railway congestion near Lonavala intermittently affected Mumbai demand.
- Commercial demand in parts of Central India slowed from mid-August through September because of heavy rainfall.
What to watch
- Whether operating margin moves back above 15.97% after two sequential declines.
- Whether interest expense growth moderates from +21.82% QoQ and the tax rate from 27.07%.
- Progress against management’s stated 16.3 mtpa FY27 cement-capacity addition.