August 14, 2024
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Stock Market

Best Cement Stocks in India for 2024 to keep on your watchlist

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Stock Market

Best Cement Stocks in India for 2024 to keep on your watchlist

What is cement? An everyday person sees it as a blackish powder that helps build homes and offices. For the country, there are some best cement stocks in India and it is a crucial element in advancing infrastructure. As the backbone of modern construction, cement is vital for a wide range of projects, from highways and bridges to urban housing and rural development.

The cement sector is crucial for driving India’s economic growth, creating jobs, and improving connectivity across the country. With an installed cement capacity of 600 million tonnes and being the second largest cement producer worldwide it plays a crucial role in building the country’s future.

This article provides a concise overview of the global cement sector, with a focus on India’s growing role in the industry. It examines key market trends, profiles major Indian cement companies, and explores their financial performance and growth strategies. This also highlights the challenges and opportunities facing the cement industry, particularly for emerging economies in the evolving global market landscape.

Industry Outlook

The Indian cement sector, the world’s second largest after China, has an installed capacity of 600 MTPA and produces 391 MTPA. Due to rising demands in housing and infrastructure, capacity is expected to increase by 150–160 MTPA by FY28. Production capacity is projected to grow by 7-8% in FY24. Currently, the industry is experiencing significant consolidation as major firms fight for market dominance. This has led to industry consolidation, with leading players market share rising from 45% in FY15 to 54% in FY24.

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The global cement market, valued at USD 405.99 billion in 2023, is projected to reach USD 592.38 billion by 2032, growing at a 4.3% CAGR. Post COVID-19, rising fuel, electricity, and freight costs have driven cement prices higher. Despite a mid-2023 decline in energy prices, production costs remain high, especially in Europe and the US.

Without cost reductions and protective regulations, competitively priced cements from Algeria, Egypt, Tunisia, and Turkey could alter market dynamics. Unless European and U.S. cement producers reduce production costs and implement protective regulations, an influx of competitively priced cements from countries like Algeria, Egypt, Tunisia, and Turkey could significantly alter market dynamics.

Emerging economies will benefit from these changes. In 2024, while Europe and the USA maintain high cement prices, countries like India, Africa, Turkey, and China are expected to lower prices due to less regulatory pressure and industry discipline. This will lead to market share competition and increased price volatility. This article gives the outlook of the Best Cement Stocks in India.

China, the leader in cement production, faces geopolitical challenges and economic strain from real estate bankruptcies. Domestic cement output fell by 10.4% between 2021 and 2022, and by 4.5% in 2023. Consequently, Chinese cement producers are expanding abroad to diversify from their saturated domestic market.

List Of Best Cement Stocks In India For 2024

UltraTech Cement

UltraTech Cement, founded in 1983 and part of the Aditya Birla Group, it is the largest public cement company by market capitalization in India. It manufactures and distributes grey cements, ready-mix concrete (RMC), and white cement, primary focus remains on the Indian market.

Ultratech operates 24 integrated manufacturing units, 33 grinding units, one clinkerization unit, and 8 bulk packaging terminals. Recently, it acquired a 23% stake in India Cements to block future takeover bids. With a current capacity of over 150 million tonnes, it aims to reach 200 million tonnes by March 2027 and holds a 23-24% share of the Indian cement market.

For FY24, it reported a revenue of ₹71,525 crore and a net profit of ₹7,005 crore.

Key metric

Ambuja Cements & ACC

Ambuja Cements & ACC, both members of the Adani Group, are leading cement companies in India. Ambuja Cements was founded in 1983, and ACC was incorporated in 1936. Together, they have a combined market capitalization of ₹ 2.2 lakh crore and an installed production capacity of 67.5 MTPA.

This capacity is supported by their infrastructure of 14 integrated units, 16 grinding units, and 79 ready-mix concrete plants. For FY24, Ambuja Cements reported a revenue of ₹33,160 crore and a net profit of ₹4,738 crore. ACC reported a revenue of ₹19,958 crore and a net profit of ₹2,337 crore.

Reports indicate that the Adani Group is looking to acquire companies in the cement sector. With the acquisition of Penna Cement for ₹ 1040 crores and plans to buyout Saurashtra Cement, Jaiprakash Associates, and Vadraj Cement, Adani group has shown ambition to have one-fifth of the Indian cement sector by the end of FY28.

This inorganic strategy to boost its capacity may lead to Adani Cements being one of the top players in the cement space going forward. At present, Adani Cement is the second largest company in the sector after UltraTech.

Key metric

Ambuja Cements

ACC

Note: Following the merger with the Adani Group, both companies have aligned their financial reporting periods. Previously reporting from January to December, they have now shifted to a financial year starting from April to March.