UltraTech Cement Limited (NSE:ULTRACEMCO) announced on 24 July 2026 that CARE Ratings Limited has assigned a credit rating of CARE AAA; Stable to its proposed non-convertible debenture issue of Rs 5,000 crore and reaffirmed ratings on its bank facilities totalling Rs 17,100 crore at CARE AAA; Stable and CARE A1+. The ratings reflect the company's market leadership in the Indian cement sector, large installed capacity of 205.5 million tonnes per annum globally, and strong financial metrics.
Key Highlights
- CARE Ratings assigned CARE AAA; Stable rating to the proposed Rs 5,000 crore non-convertible debenture issue, indicating superior creditworthiness and minimal credit risk.
- The agency reaffirmed CARE AAA; Stable and CARE A1+ ratings on UltraTech's bank facilities of Rs 17,100 crore, comprising Rs 14,700 crore in long-term and short-term facilities and Rs 2,400 crore in long-term facilities.
- UltraTech holds the largest installed cement capacity in India at 200.1 million tonnes per annum as of April 2026, with an additional 5.4 million tonnes in the United Arab Emirates, totalling 205.5 million tonnes globally.
- The company plans to add approximately 37 million tonnes of cement capacity, expected to increase total installed capacity to over 242.5 million tonnes by the end of FY28.
- Net debt to PBILDT (profit before interest, lease rentals, depreciation and tax), including letters of credit and security deposits, improved to 1.38 times as of 31 March 2026, from 1.89 times in the prior year.
- In FY26, revenue increased by 16.53 percent to Rs 88,511.53 crore, driven by 13.56 percent volume growth to 154.25 million tonnes and blended realisation improvement of 2.68 percent to Rs 5,665 per tonne.
- PBILDT margins expanded to 19.23 percent in FY26 from 16.53 percent in the prior year, benefiting from higher green power mix and operational leverage gains.
About the Company
UltraTech Cement Limited (NSE:ULTRACEMCO) is India's largest cement manufacturer by installed capacity and operates across the building materials and infrastructure sectors. The company manufactures and sells Portland cement, white cement, and ready-mix concrete through 34 integrated manufacturing units, 36 grinding units, one clinkerisation unit, and 10 bulk packaging terminals across India. It operates under the UltraTech and Birla White brand names and maintains a distribution network of over 1.45 lakh channel partners with a market reach exceeding 80 percent across India. The company also operates 465 ready-mix concrete plants in 167 cities. Headquartered in Mumbai with facilities across all major Indian regions and in the United Arab Emirates, UltraTech is listed on the National Stock Exchange (NSE:ULTRACEMCO) and BSE Limited (Scrip Code 532538). It is part of the Aditya Birla Group.
Announcement in Detail
CARE Ratings Limited, through its CareEdge Ratings division, assigned a credit rating of CARE AAA; Stable to UltraTech Cement's proposed non-convertible debenture issue of Rs 5,000 crore on 23 July 2026. Simultaneously, the agency reaffirmed its ratings on the company's existing bank facilities: CARE AAA; Stable and CARE A1+ on long-term and short-term facilities totalling Rs 14,700 crore, and CARE AAA; Stable on long-term facilities of Rs 2,400 crore. The ratings are assigned under the regulatory framework of the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) respectively.
The rating rationale is grounded in UltraTech's position as India's cement market leader, supported by its extensive manufacturing footprint across multiple regions. As of April 2026, the company's domestic grey cement capacity stands at 200.1 million tonnes per annum, with an additional 5.4 million tonnes from its overseas operations in the United Arab Emirates, bringing total global cement capacity to 205.5 million tonnes per annum. CARE Ratings notes that the company's scale and geographic diversification support volume growth and pricing resilience. The agency highlights that over the past decade, UltraTech has expanded its capacity more than threefold from approximately 65 million tonnes per annum in FY16 to 200 million tonnes per annum, reflecting sustained capital deployment aligned with demand growth.
The agency's rating opinion incorporates UltraTech's financial performance in FY26, where revenue grew 16.53 percent to Rs 88,511.53 crore, driven by 13.56 percent volume growth to 154.25 million tonnes and 2.68 percent improvement in blended realisations to Rs 5,665 per tonne. PBILDT increased to Rs 17,020 crore with margins expanding to 19.23 percent, compared to Rs 12,557 crore and 16.53 percent margins respectively in the prior year. The ratings also account for improvement in leverage metrics, with net debt to PBILDT, including letters of credit and security deposits, declining to 1.38 times as of 31 March 2026 from 1.89 times as of 31 March 2025.
Impact on Investors
The AAA rating assignment and reaffirmation by CARE Ratings carry material implications for investors. A CARE AAA; Stable rating denotes the highest safety grade and indicates minimal credit risk, reinforcing confidence in UltraTech's ability to service its debt obligations on schedule. For existing shareholders, the successful rating of the Rs 5,000 crore debenture issue suggests the company has secured favorable access to capital markets at competitive terms, reducing refinancing risk and supporting its stated capacity expansion plans. The reaffirmation of bank facility ratings at AAA; Stable/A1+ similarly signals that the company maintains strong operational and financial standing with its lenders, reducing the likelihood of covenant tightening or increased borrowing costs.
Investors will note that the improvement in net debt to PBILDT from 1.89 times to 1.38 times year-over-year, despite ongoing capital expenditure, indicates that UltraTech is managing its leverage profile prudently and generating sufficient internal cash flows to support capacity expansion. The filing discloses that the company plans to add approximately 37 million tonnes of capacity by FY28-end, which requires significant capital investment; the AAA rating affords the company reliable access to funding for this expansion. However, investors should observe that CARE Ratings has flagged exposure to cement sector cyclicality and volatility in input costs, particularly pet coke pricing, which remains subject to geopolitical pressures. The agency notes that prolonged input cost pressure could lead to higher operating costs, representing a key monitorable factor. While the company maintains long-term fuel contracts and adequate raw material inventory for approximately three to four months of operations, these risk factors warrant continued monitoring.
Sector / Market Context
India's cement sector has demonstrated sustained growth over the past decade, driven by infrastructure development, urbanisation, and construction activity. The Ministry of Statistics and Programme Implementation reported that the index of industrial production for cement registered growth in recent fiscal years, supporting capacity additions by major producers. India remains a globally significant cement market, second only to China in production volumes. The cement industry is characterised by competitive intensity, geographic fragmentation due to high transportation costs relative to product value, and exposure to raw material and energy price volatility. Cyclicality in cement demand correlates closely with construction cycles and economic activity levels, which investors monitor through indicators such as steel consumption and government infrastructure spending.
Within this context, UltraTech's position as the largest domestic cement producer by capacity provides it with scale advantages in cost management and market reach. The company's geographic diversification across south India (50.5 MTPA), north India (37.5 MTPA), west India (34.5 MTPA), east India (33.3 MTPA), and central India (35.6 MTPA) mitigates regional demand concentration risk. The industry backdrop of sustained infrastructure investment and urbanisation growth provides a demand support framework for the company's planned capacity additions to over 242.5 MTPA by FY28-end.