UltraTech borrowed through a heavy half-year and still aims to cut leverage by March

UltraTech Cement sold more cement in the September 2026 quarter, yet its balance sheet moved the other way. Net debt rose to 1.24x to 1.26x a year's EBITDA (earnings before interest, tax, depreciation and amortisation) at the end of September on the company's own measure, up from 0.87x at the end of June. The chief financial officer, Atul Daga, said the rise came mostly from capital spending and the dividend, which went out as a single payment on one day. He also said the ratio would be back below 1x by the end of March.

The filed results show the extra borrowing directly. Borrowings rose by ₹5,058 crore in the six months to September. During the quarter the company also issued ₹5,000 crore of non-convertible debentures, a form of bond. That lifted interest cost to ₹494 crore in the quarter, from ₹396 crore the quarter before. Bonds add to gross debt; Daga's explanation for the higher net figure was the spending and the dividend.

Bringing the ratio back down will rest mainly on what the business earns, and operating profit has grown more slowly than sales over the past year, by our arithmetic from the filed results. Operating margin, operating profit as a share of sales in the filed results, was 14.9% last quarter against 15.5% a year earlier. It was also below its year-earlier level in the two quarters before that, while the quarter preceding them had been above its own year-earlier figure.

Fuel was the cost Daga singled out: it rose from ₹45 to ₹51.5 for each bag of cement. Selling prices are what management expects to close the gap. Daga said trade prices ended September at least about 3% above their first-quarter average, and that the full benefit would show in third-quarter earnings rather than at once. He also said costs were already high and that he did not know whether they had peaked. Little of the rise is in the filed quarter: Daga said average trade prices for the quarter were slightly below the first quarter's, held down by a soft August, before prices turned up in the second half of September.

Capital spending stays high in the meantime. Daga kept full-year capital expenditure at about ₹10,000 crore and said a firmer view would come after the third-quarter results. Last year's record on the ratio itself is mixed. In January the company had guided to 0.8x to 0.9x net debt to EBITDA by March; it finished at 0.94x, below 1x but above that range. This time the stated goal is the looser of the two, below 1x.