UltraTech Cement has announced its foray into the wires and cables segment with a planned capex outlay of ₹1,800 crore over the next 2 years. The new plant will be located near Bharuch, Gujarat, and is expected to be operational by December 2026. This move is anticipated to result in a 4-5% EBITDA accretion on the FY27E EBITDA base upon full ramp-up.
The company’s strong cashflow generation, with an operating cash flow of ₹29,000 crore from FY26E to FY27E, supports this expansion into a new business segment. Given UltraTech’s growth aspirations, there is a possibility of venturing into other building solution segments in the future. In the past, the group had also ventured into the paints segment through Grasim.
While the capex requirements are low and are not expected to strain the balance sheet (net debt of ₹16,600 crore as of December 2024), concerns may arise regarding capital allocation due to the investment in a non-cement business.
Despite these considerations, it is still recommended to maintain a Buy rating on UltraTech Cement. The target price for March 2026 is set at ₹13,000, based on 19x FY27E EV/E, as UltraTech’s return ratios are expected to improve over the next few years due to increased asset turnover, cost-effective expansions, and enhanced profitability.
