The ever-changing dynamics of the cement industry are related to Infrastructure spending which is capex driven by the government. This has led to an increase in capacities and acquiring companies to utilize the synergy which is expected. In this article, we will look at Ambuja Cements vs Ultratech Cements which are trying to increase their market share through acquisitions and capex.
Ambuja Cement Overview
Ambuja Cements comes under the helm of the Adani Group which operates as one of India’s leading cement manufacturers. They were established in 1981 and the company has built a reputation for its high-quality products. Ambuja which focuses on operational efficiency, has a significant presence in the western and southern regions of India. The company recently announced plans to acquire a 46.80% stake in Orient Cement Limited with a value of Rs. 8,100 crore, which will help to increase its capacity and market share.
Ultratech Cement Overview
Ultratech Cement is a subsidiary of Aditya Birla Group is the largest manufacturer of grey cement, white cement, and ready-mix concrete in India. The company was founded in 1983 and over the years Ultratech has expanded its footprint across the country and abroad. Ultratech’s strategic acquisitions and expansions have positioned themselves as a market leader with a diverse portfolio.
Financials Comparison – Q2FY25
In Q2FY25, Ambuja Cement reported a revenue from operations of Rs. 8,311 crore which is a down from Rs. 8,894 crore in Q1FY25. The profit after tax stood at Rs. 790 crore, down 48% QoQ and 30.3% YoY. Meanwhile, Ultratech Cement’s financials for the same period showed an operational revenue of Rs. 15,635 crores with a PAT of Rs. 825 crores in Q2FY25, when compared with Q1FY25’s revenue of Rs. 18,070 crores and PAT of Rs. 1,695 crores it has declined.
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Recent Future Plans:
Ambuja Cement
The company aims to improve its growth trajectory by improving its operational capacity through the acquisition of Orient Cement Limited. This acquisition will include 8.5 MTPA which is an addition to its existing capacity and further strengthen its market position in South and West India. The company also plans to increase its total capacity to over 100 MTPA by FY25.
Ultratech Cement
Ultratech is focusing on expanding its production capacity by investing in new plants and upgrading existing facilities. The company plans to increase its overall capacity to 160 MTPA by 2025 through various strategic initiatives, including acquisitions and greenfield projects.
Current Capacity as of Q2FY25 and Capex Plans
The Adani group’s total operational capacity has been expanding with 78.9 MTPA and plans to reach 100 MTPA in FY25 following the completion of ongoing projects and acquisitions. The company has invested substantial capital expenditure for these expansions.
Ultratech Cement currently has an operational capacity of around 140 MTPA as of March 2024. The company is invested and is into capex plans for FY24 for which the capacity is expected to be 183.5 MTPA by FY27.
Conclusion
Both Ambuja Cement and Ultratech Cement are prominent players in the Indian cement industry with their strategies for growth. Ambuja’s recent acquisition of Orient Cement can further enhance its market presence, while Ultratech continues to expand through strategic investments. As both companies aim for increased capacities and improved efficiencies, their competitiveness in the cement industry is likely to be more related to the larger players to utilize the Indian economy infrastructure growth.
Written by: Santhosh
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