Ultratech Cement S/Gdr

Ladies and gentlemen, good evening and welcome to the Ultratech Cement Limited Q3 FY26 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star 10-0 on your touchstone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Atul Dhaka, business head and CFO of Ultratech Cement Limited. Thank you, Anuvat Yusuf.

Thank you so much. Good evening, good afternoon, ladies and gentlemen. Once again, a very warm welcome to yet another call on a Saturday evening for Alta Tech for the third quarter results of 26. Before I begin, let me assure you, we will not make this as a habit of spoiling your Saturdays. But this Saturday is worth spending time. Let me get on to the main core topic for discussion which I have in mind today. Demand. That is the most important aspect for our business. Everything else becomes secondary and falls in line. And as we see the progress, government's focus on infrastructure is translating into a robust pipeline of new projects nationwide. with several market investments announced across every region, translating into solid demand. You must have all read about it in the media at different points in time, but let me put a perspective together in one place, region by region. In the north, Punjab is taking extensive road development initiatives, spending about 15,000 crore in its markets, New corridors have been announced in Delhi Metro for about 12,000 crores. Uttar Pradesh is developing 1,575 kilometers metro network across major cities. Of course, that goes till 2047. It's a long horizon, multi-city infrastructure pipeline, indicating sustained demand and significant opportunities for cement highway projects. continued investment in road connectivity and logistics corridors across the state, like the four-lane green field highway project between a place called Barabanki and Mustafaabad. Let's go to West India. Maharashtra is seeing a significant pipeline of large transport and mobility projects, signaling strong multi-year demand for cement and construction materials. Mega projects like the Uttan Viraj ceiling, about 58,000 crores, Mumbai Metro expansions, Pune Metro multiple lines, and road concretization in Mumbai. Center's clearance of Pune, Chhatrapati, Sambhaji Nagar Expressway Highway, spanning 245 kilometers. The particular focus on improving connectivity for rural communities. Nearly 350 kilometers of state highways, 2,577 kilometers of rural roads, slum rehabilitation initiatives, all of these are going to boost urban cement demand. Expressways and ring roads, Nashik, Wadawan, Bandara, Gadchiroli, etc. add to further boost for demand. Gujarat's nine high-speed corridors covering about 800 kilometers are fast-tracking connectivity. and will add further. Cabinet has approved two major highway projects worth 20,000 crore plus, Nashik-Sola course, and one more, signaling continued momentum in India's integrated high-speed connectivity push under the PM Gadi Shakti. Stepping down into South India, Bangalore is undergoing a major mobility transformation, The metro network set to expand from 96 kilometers to 175 kilometers by the end of December 27. Karnataka government has unveiled an urban infrastructure program which will have longest 40-kilometer twin tunnel, a 41-kilometer double-decker metro, 110-kilometer elevated corridors. Center has approved 10,000-grid expansion of four key highways measuring about 273 kilometers, which will improve connectivity across Telangana. New Mangalore port has announced capacity expansion to handle 100 million tons by 2047. We can't forget the eastern corridor. West Bengal has its own challenges, but is planning largest road initiatives, about 8,487 crores per gram, 15,000 kilometers of rural roads, 5,019 kilometers of urban roads. All this just goes to say that India is developing very fast. Bihar is rolling out three major Ganga road projects worth 70,000 crores. Digha, Shaipur, Bhita, Koliwar, 35 kilometers. Munger, 42. Sultanganj, Bhagalpur, 41. So I'm not advocating or speaking on behalf of NHAI, but this is what the story is surfacing. Chhattisgarh. Chhattisgarh, center is approved, 774 kilometers, roads covering 2,000 plus kilometers under the PMG SY4. The state has already completed 8,753 roads and bridges are also under the same phase. Media rail expansion across Maharashtra, Chhattisgarh, Gujarat, M.P. reflect the scale and diversity of investment underway. To give you a perspective, roads and highways require approximately 350 to 900 kilometres or 900 tonnes per kilometre. With thousands of kilometers under construction or planned across all regions, this is going to be huge. Elevated metro requires 11,000 metric tons per kilometer. Underground metro requires anywhere between 17,000 to 19,000 metric tons per kilometer. Railways, 90 to 100 metric tons of cement. Ports and airports go up to 50 kgs per person. Housing, if I were to look at low-income housing programs, affordable housing, and rural connectivity projects, sustained steady demand. With a strong project pipeline, demand for cement will remain very continuous and as strong as possible. Infrastructure is seeing the next big wave of growth. What does that imply? More jobs, more demand for housing and social infrastructure, i.e., schools, hospitals, commercial complexes, office at all. We are present across the country. Just to tell you about our RMC network, RMC network is about 163 cities which we are already covering and rapidly expanding. Ultratech is so sweetly positioned to meet the demand like nobody else. We are witnessing growth, unprecedented growth in New areas, new avenues like data centers, GCC, renewable energy projects, you name it and things are happening. As somebody just said, India has arrived. It's the market with a population of over 1.4 billion people, youngest working class, and an opportunity across the land bank for development. At Ultratech, we are fully geared up to capture these opportunities. Our approach remains rooted in disciplined execution, advancing our next phase of capacity expansion while ensuring every investment is backed by rigorous cost control and operational efficiency. In our fourth phase of expansion, last part of orders have already been placed, work has already commenced, and we will be on time. Importantly, we are funding all our growth through internal accruals, maintaining a prudent balance sheet and a healthy leverage profile. This, combined with our pan-India network and deepening retail footprint, positions us to capture incremental demand at a very rapid pace by safeguarding our margins. You would have seen our leverage position this quarter end On a consolidated basis, we are at 1.08x net debt EBITDA. I believe and I'm very confident that we'll reach the mark of 1x and be in .8, .9x net debt EBITDA by the end of this fiscal year. Integration of recent acquisitions is progressing very well with rapid brand transition. ISORAM and India Cement are ahead of the initial plan initial plans with brand conversion at Kesaram having reached 69% in December 25. And today, if we speak, it must have crossed further. India Cements has already crossed 58% at the end of December 25. For both these assets, we have begun our cost improvement CAPEX program, which will result in benefits and will start reflecting in the P&L of January-March 27. At Kesaram, we have already spent 263 crores out of the commitment of about 382 crores. At India Cements, we have committed already 601 crores and spent 144 crores on the program. Talking about CAPEX, the other initiative, Cable and Wires, is progressing as per plan. About 500 crores worth of orders have already been placed. We have spent 197 crores. 30% of the planned team is already on board. Civil work has started, and we are on schedule to see the launch of our product in the October-December 26th quarter, as was committed earlier. Talking about our efficiency improvement program, we continue to deliver solid and measurable results. In fact, now I am very confident that we should be doing better than what we had committed. We shall give an exact quantification in financial impact with the annual results for the year. However, you would have noticed the lead distance has dropped to 363 kilometers. The clinical conversion factor is improved to 1.49. The most important factor, I believe, for us is to have a strong demand pipeline. And you will notice that January, March quarter, God willing, we will operate at more than 90% of our existing installed capacity, clearly demonstrating growth in the trade markets as well as non-trade markets. If the demand is good, everything else falls in line. Ultimately, it is about the bottom line where it comes from doesn't really matter. Quite often everybody is focused on cement prices, which had remained subdued post GST change, September, last week of September, October, November saw some softening prices. But with growing demand, we are witnessing improvement in prices in all segments across the country. There have been cost increases in the cost of pet coke and coal. New labor code will have its own impact, rupee depreciation. All these will have an impact on the cement industry and obviously there is reason to pass on these cost escalation into prices. We are very confident of a very bright future for the next quarter and after that quarter and after that and after that. That doesn't mean I'm restricting myself to a fiscal 27, but the story is far longer. As India embarks on the next decade of development, Alcetec is proud to play a pivotal role in building the nation's future. We remain confident that our strategic initiatives in building capacities across the country in critical market locations, coupled with sectors, positive outlook, we will continue to deliver growth faster than the industry. And we welcome all of you to participate in our journey. Don't miss the bus. Thank you. And over to you for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question assembles. The first question is from the line of Amit Kumar Murarka from Access Capital. Please go ahead.