As of December 31, 2023, the UltraTech Cement net debt was at Rs 5,541 crore.
Introduction:
UltraTech Cement, the flagship company of the Aditya Birla Group, is strategically focusing on reducing its debt as it experiences improved cash flow driven by sustained robust demand for building materials.
The company’s Chief Financial Officer, Atul Daga, outlined plans during an analyst call, highlighting the positive impact of strong demand on financial performance.
Financial Overview:
As of December 31, 2023, UltraTech Cement’s net debt stood at Rs 5,541 crore. Despite the marginal increase in net debt due to higher capex cash flow and working capital requirements, the company reported a 67 percent surge in net profit for Q3.
The financial results showcased the company’s ability to navigate challenges and capitalize on favorable market conditions.
Capex and Working Capital Strategy:
UltraTech Cement anticipates exceeding its initial capex estimate for the current fiscal year, targeting around Rs 9,000 crore.
The company plans to maintain a similar capex cash flow in the subsequent fiscal year. The CFO highlighted opportunistic bets in working capital, such as the purchase of coal and pet coke, contributing to the overall financial strategy.
Confidence in Demand and Utilization Rates:
UltraTech Cement remains confident in the sustained demand for its products, expecting a utilization rate of 80-85 percent in the fourth quarter, up from 77 percent in the third quarter.
The company envisions a high throughput quarter, driving further improvement in cash flows and a reduction in net debt.
Debt Reduction Target:
With a strategic focus on debt reduction, UltraTech Cement aims to reach a zero net debt position by the end of March 2025.
The company’s proactive approach to managing debt aligns with its commitment to maintaining a strong financial position and capitalizing on growth opportunities.
Acquisition Strategy:
UltraTech Cement had previously announced its intention to acquire the cement business of Kesoram Industries, part of the BK Birla Group, in an all-stock deal. This acquisition reflects the company’s strategic expansion plans amid competitive dynamics in the cement industry.
Conclusion:
UltraTech Cement’s emphasis on debt reduction, coupled with positive financial results and strategic capex planning, positions the company for sustained growth.
The commitment to reaching a zero net debt position by 2025 underscores UltraTech Cement’s financial discipline and long-term resilience in the dynamic building materials market.
