Fitch Affirms UltraTech Cement at ‘BBB-’, Sees Strong Volume Growth Ahead

Fitch Ratings has affirmed UltraTech Cement’s long-term foreign- and local-currency issuer default ratings at ‘BBB-’ with a stable outlook, and also reaffirmed the same rating on its $400 million senior unsecured notes due 2031.

Fitch expects UltraTech’s cement sales volume to grow at a CAGR of 10% over 2025-26 to 2027-28, outpacing the 7-8% annual growth it sees for the broader domestic industry. The rating agency said this momentum will be supported by the company’s strong brand, cost advantages, and ongoing capex for capacity additions. It added that demand for cement should also benefit from the recent reduction in GST rates.

Fitch projects UltraTech’s adjusted EBITDA net leverage to ease to 1.5 times in 2025-26 from 1.8 times in 2024-25, and remain steady thereafter, staying well below the negative sensitivity threshold of 2.5 times. It highlighted that EBITDA growth should help balance the planned rise in capex and net debt, although any large acquisitions by UltraTech could pose downside risks.

The rating agency expects the company’s adjusted unit EBITDA margin to improve to about ₹1,000 per tonne in 2025-26 from ₹906 per tonne in 2024-25, aided by stronger pricing and cost efficiencies. UltraTech is currently shifting volumes from its recent acquisitions—India Cements and Kesoram Industries’ cement assets—to its own brand, which Fitch believes will lift price realisation over the next year.

UltraTech plans to spend around ₹100 billion to expand its grey cement capacity in India by roughly 25%, taking it to 235 million tonnes per annum by 2027-28. The company is also setting up a wires and cables manufacturing plant with an investment of ₹18 billion to broaden its product portfolio.

Fitch said a weaker market position, deterioration in unit EBITDA margin, leverage rising above 2.5 times, or a decline in the parent’s consolidated credit profile could trigger a negative rating action.