Cement Sector Introduction:
India is the world’s second-largest cement producer. It accounts for more than 7% of all installed capacity worldwide. India has enormous development potential in the infrastructure and construction sectors, and the cement industry is projected to benefit significantly from it. Recent initiatives, such as the establishment of 98 smart cities, are expected to give the sector a significant boost.
Several foreign players have recently invested in the country, aided by appropriate government foreign policies. These players include Lafarge-Holcim, Heidelberg Cement, and Vicat. A crucial component that contributes to the sector’s growth is the readily available raw resources for cement production, such as limestone and coal.
India produced 294.4 million tonnes (MT) of cement in FY21, up from 329 million tonnes (MT) in FY20.
Cement Market Growth:
Cement production reached 329 million tonnes (MT) in the fiscal year 2020 and is expected to increase to 381 MT by fiscal year 22. However, consumption was 327 MT in FY20 and is expected to reach 379 MT in FY22. By 2020, cement manufacturing capacity is expected to reach 550 MT. Due to India’s extensive and high-quality limestone reserves, the cement industry has enormous expansion potential.
According to ICRA, India’s cement production is predicted to expand by 12% year on year in FY22, owing to rural housing demand and the government’s strong focus on infrastructure development.
According to Crisil Ratings, the Indian cement sector is expected to add a record 80 million tonnes (MT) of capacity by FY24, the highest level in the last decade, owing to rising spending on housing and infrastructure.
Increased infrastructure spending – 34.9 percent on roads, 8.7 percent on metros, and 33.6 percent on railroads in FY22 budget estimates will boost cement demand.
CLSA (an institutional brokerage and investment company) reports that the Indian cement market is experiencing increased demand. According to the corporation, key companies include ACC, Dalmia, and Ultratech Cement. Indian cement companies recorded a substantial return in earnings in the second quarter of FY21, while demand for the industry grew due to rural recovery. Demand remained strong as rural markets normalized. CLSA anticipates a 14% YoY increase in EBITDA in the cement sector for its coverage stocks in FY21.
Top 15 Cement Companies in India:
|S.No.||Name||CMP Rs.||ROCE 5Yr %||ROE 5Yr %||P/E||EV / EBITDA||PB X PE||PEG||Debt / Eq||Int Coverage||ROCE %||ROE %||ROIC %||ROA 12M %||EPS 12M Rs.||Ind PE||Mar Cap Rs.Cr.|
|1||UltraTech Cement Ltd||7723.9||12.81||12.37||34.97||17.57||168.91||1.99||0.33||8.35||15.13||13.13||12.09||6.69||220.88||13.99||222961.95|
|2||Shree Cement Ltd||27247.4||17||15.26||37.33||21.38||225.47||2.47||0.14||16.26||19.47||16.32||50.81||11.39||729.84||13.99||98310.66|
|3||Ambuja Cements Ltd||387||15.81||8.94||23.14||9.91||72.89||0.82||0||38.52||18.29||10.47||13.9||8.06||16.23||13.99||76844.47|
|5||J K Cements Ltd||3523.1||15.57||16.06||34.96||17.21||239.83||0.54||0.94||5.73||20.03||20.98||11.9||7.97||100.76||13.99||27222.38|
|6||The Ramco Cement Ltd||1026.75||14.85||14.27||22.02||16.98||84.56||3.15||0.56||14.78||14.71||14.43||11.83||7.11||46.7||15.86||24261.32|
|7||JK Lakshmi Cement Ltd||584.45||11.14||10.35||13.47||7.74||40.81||0.11||0.74||5.3||20.19||21.49||16.88||8.08||41.01||13.99||6877.23|
|8||Heidelberg Cement India Ltd||226.25||21.02||17.74||15.45||8.76||55||0.28||0.22||10.71||24.94||22.27||19.47||11.09||14.64||13.99||5127.12|
|9||Star Cement Ltd||95.6||17.23||17.38||19.91||9.02||35.84||1.61||0.02||23.28||13.68||12.24||14.76||9.78||4.8||13.99||3942.82|
|10||K C P Ltd||139.75||14.31||11.43||7.67||3.64||12.43||0.65||0.35||9.93||21.55||17.77||12.85||9.06||18.21||15.86||1801.67|
|11||NCL Industries Ltd||218.45||17.34||16.17||7.08||4.52||9.7||0.32||0.41||11.43||26.74||24.83||17.88||12.09||30.84||15.86||988.11|
|12||Deccan Cements Ltd||612.75||19.76||15.7||7.44||3.75||10.34||0.36||0.2||17.71||26.61||22.68||17.56||14.64||82.34||15.86||858.31|
|13||Anjani Portland Cement Ltd||322.6||23.56||18.66||10.84||10.12||24.28||0.32||1.32||9.62||32.68||27.4||23.18||19.81||29.76||15.86||815.72|
|14||Saurashtra Cement Ltd||73.2||12.87||10.36||8.86||3.71||8.68||0.62||0.09||19.91||20.85||14.87||15.69||10.42||8.32||13.99||514.1|
|15||Keerthi Industries Ltd||194.2||14.54||11.59||9.61||3.93||17.3||3.07||0.39||9.61||37.54||33.97||26.12||15.26||22.17||15.86||155.75|
- ROCE % – Return on Capital Employed in percentage, per-annum.
- ROE % – Return on Equity in percentage, per-annum.
- P/E – Price to Earnings ratio.
- EV/EBITDA – Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization expenses.
- PEG – Price to Earnings Growth ratio.
- ROCE 5 Years – Return on Capital Employed in percentage, 5 years average.
- ROE 5 Years – Return on Equity in percentage, 5 years average.
UltraTech Cement Ltd
UltraTech was founded in 2004 following Grasim Industries Ltd’s acquisition of Larsen & Toubro Ltd’s cement business. As of September 30, 2021, Grasim (the Aditya Birla group’s flagship company) owned 57.28 percent of UltraTech, the other promoter group owned 2.76 percent, and financial institutions and the general public owned the remainder. UltraTech has a 4 MTPA capacity in the UAE and Bahrain through UltraTech Cement Middle East Investments Ltd (UCMEIL).
UNCL operates a 6.25 MTPA cement plant in Rajasthan, which consists of a 4.85 MTPA integrated cement plant and a 1.40 MTPA split grinding plant. Additionally, UNCL has a capacity of 2 MTPA clinker in China and a capacity of 2 MTPA and 0.3 MTPA grinding in the UAE and China, respectively.
Following the acquisition of Century’s cement business, UltraTech now has a consolidated capacity of 116.8 million tonnes per annum (MTPA). The assets of Century are located in Madhya Pradesh, West Bengal, Maharashtra, and Chhattisgarh. Additionally, the business plans to add 19.5 MTPA of capacity across central, eastern, and northern markets, bringing total capacity to 130.9 MTPA by the end of fiscal 2023.
UltraTech declared a profit after tax (PAT) of Rs 3,010 crore and operating income of Rs 23,847 crore for the six months ended September 30, 2021, compared to Rs 1,692 crore and Rs 18,021 crore for the same time last fiscal.
Shree Cement Ltd
Shree Cement Limited (SCL) was founded in 1979 by the Bangur family of Kolkata’s B.G. Bangur-H. M. Bangur faction. The company manufactures cement and has an installed capacity of 43.40 million tonnes per annum (mtpa) (47.40 mtpa on a consolidated basis) as of June 30, 2021, with facilities spread across Rajasthan, Chhattisgarh, Uttarakhand, Bihar, Jharkhand, Haryana, Uttar Pradesh, Karnataka, Odisha, and the United Arab Emirates, RoofOn, Shree Cement, Bangur Power, Bangur Cement, and Rockstrong are the company’s brand names for cement.
As of June 30, 2021, SCL is also engaged in power generation with a total installed capacity of 763 MW divided between coal, WHRS, solar, and wind energy sources. The company is now investing in capex to expand its 14 MTPA capacity across geographies in order to bolster its market position; these capacities are projected to be operational by FY24.
Shree Cement manufactures and sells cement and cement-related products and is one of the country’s lowest-cost producers. It is India’s third-largest cement manufacturer, with an installed capacity of 43.4 million tonnes per annum.
Ambuja Cements Ltd
Ambuja Cements Ltd (founded in 1993) is one of India’s largest cement manufacturers, operating in 80 countries and specializing in cement, aggregates, and concrete. It is a subsidiary of Switzerland’s LafargeHolcim Limited, a worldwide company with operations in 70 countries.
Ambuja Cements is one of the largest cement manufacturers in India. In January 2006, Holcim Ltd (Holcim) purchased a 14.8% stake in Ambuja Cements. In April 2006, Holcim acquired management control of the company through an open bid. Holcim and Lafarge SA announced their merger on a global scale in April 2014.
The amalgamated entity was renamed LafargeHolcim in July 2015. Effective August 12, 2016, ACC became a subsidiary of Ambuja Cements following the proposed restructuring between ACC and Ambuja Cements.
Ambuja Cement’s consolidated profit after tax (PAT) was Rs 1,228 crore on operating income of Rs 7,715 crore for the three months ended March 31, 2021, compared to Rs 743 crore on operating income of Rs 6,250 crore for the same period last year.
Ambuja Cement declared a standalone profit after tax of Rs 665 crore on operating income of Rs 3,621 crore for the three months ended March 2021, compared to profit after tax of Rs 399 crore on operating income of Rs 2,828 crore for the same period the previous year.
ACC Limited (established in 1936), a LafargeHolcim Group company, is primarily engaged in the manufacture and sale of cement and ready-mix concrete. The company operates manufacturing plants throughout India and mostly serves the domestic market.
ACC is India’s oldest cement firm, with a total installed capacity of 34.5 million tonnes per annum as of March 31, 2021. Additionally, the corporation manufactures ready-mix concrete and has 50 factories throughout the country. ACC and Ambuja Cements are both subsidiaries of LafargeHolcim.
As of March 31, 2021, LafargeHolcim owned 63.27 percent of Ambuja Cements, which in turn owned 50.05 percent of ACC. LafargeHolcim also owns 4.48 percent of ACC via Holderind Investments Ltd.
ACC’s consolidated profit after tax (PAT) was Rs 563 crore on operating income of Rs 4,292 crore for the three months ended March 31, 2021, compared to Rs 323 crore on operating income of Rs 3,502 crore for the same period last year.
J K Cements Ltd
With over four decades of experience in cement manufacturing, the company is engaged in the manufacture and sale of cement and cement-related goods. It is a subsidiary of the JK Organisation, a multi-disciplinary industrial conglomerate.
JK Cement Ltd. is one of India’s largest manufacturers of grey cement and the world’s third-largest producer of white cement. The company has partnered with India’s multi-sectoral infrastructure demands for four decades on the strength of its product quality, client orientation, and technological leadership. JK Cement began commercial operations in May 1975 with the establishment of its flagship grey cement plant at Nimbahera, Rajasthan.
As of now, the company has an installed capacity of 15 MnTPA for grey cement, making it one of the largest cement makers in the country. JKCL is the world’s largest maker of wall putty and the third largest manufacturer of white cement, with a total white cement capacity of 1.20 million tonnes per annum and a wall putty capacity of 1.2 million tonnes per annum. JK White Cement is sold in 43 countries, and the company maintains a significant worldwide presence through two subsidiaries: JK Cement Works Fujairah FZC and JK White Cement (Africa) Ltd.
The Ramco Cement Ltd
Ramco Cements Ltd. is a cement, ready-mix concrete (RMC), and dry mortar manufacturer. It is mostly focused on the Indian domestic market.
TRCL is a well-known cement company in India that offers its goods under the Ramco name. TRCL operates five sites in Tamil Nadu, Andhra Pradesh, and Karnataka with an aggregate installed cement capacity of 12.49 million tonnes per annum. In South/East India, it has an additional grinding capacity of 7.2 million tonnes.
TRCL owns and operates 175 MW of captive thermal capacity and 125.95 MW of captive wind capacity. Additionally, the company has two smaller subsidiaries: Ramco Windfarms Limited (which operates a 39-MW wind farm) and Ramco Industrial and Technology Services Limited (which is into transport services, manpower services, and IT).
The company is a subsidiary of the larger Ramco Group, which was formed in 1938 by the late P.A.C. Ramasamy Raja and is currently run by his grandson, Mr. P.R. Venketrama Raja. The Ramco Group consists of Ramco Industries Limited (rated [ICRA] AA-/Stable/[ICRA] A1+), Ramco Systems Limited (rated [ICRA] A/Stable/[ICRA] A2+), and Rajapalayam Mills Limited.
JK Lakshmi Cement Ltd
JK Lakshmi Cement Ltd, a subsidiary of the JK Group, is a manufacturer and supplier of cement and associated goods such as RMC and AAC blocks in several Indian states.
JKLC is a subsidiary of the JK group (eastern zone) and was founded by the late Lala Lakshmipat Singhania and his son, Mr. Hari Shankar Singhania. Mr. Bharat Hari Singhania now serves as the company’s president (chairman and managing director).
JKLC established its first cement factory in 1982 with a capacity of 0.5 million tonnes per annum, which has since expanded to 13.9 million tonnes per annum of cement and 8.4 million tonnes per annum of clinker as of June 30, 2021. Sirohi, Udaipur, and Durg are integrated units, while Jhajjar, Cuttack, Kalol, and Surat are grinding units.
Additionally, it has a 54 MW CPP in Sirohi, a 15 MW WHR plant, and a 6 MW solar power plant, which makes the entire northern region nearly self-sufficient in energy. The Udaipur unit formerly got power from the grid, but once the integrated unit was commissioned in March 2017, it began sourcing power from its 6 MW WHR plant. The company has already commissioned a 7 MW WHR plant at its Durg integrated complex and has a 20 MW CPP.
Profit after tax (PAT) for the three months ended June 2021 was Rs 136 crore on revenue of Rs 1,326 crore, up from Rs 51 crore and Rs 912 crore in the previous fiscal year’s similar period.
Heidelberg Cement India Ltd
Heidelberg Cement India is a part of Germany’s HeidelbergCement Group. The company operates in Central India from Damoh (Madhya Pradesh), Jhansi (Uttar Pradesh), and Ammasandra (South India) (Karnataka).
HCAG is one of the world’s largest producers of building materials, with market leadership positions in cement, aggregates, and ready-mix markets, with operations in more than 50 countries. The strong legal ties are a result of HCAG’s 69.4 percent stake in HCIL and the presence of a centralized treasury, as debt is originally raised on HCAG’s books and then transferred downstream to the Indian corporation.
The company’s close legal ties to HCAG are demonstrated by the fact that its working capital facilities are exempt from HCAG’s global restrictions and include a cross-default provision. Additionally, HCAG’s bond instruments contain cross-default clauses ranging from EUR50 million to EUR100 million.
HCIL achieved net cash positive cash flow in FY20 and maintained it through the end of FY22, with a negative net debt of INR1.34 billion (FY21: negative INR1.37 billion; FY20: negative INR0.66 billion), owing to strong cash flow generation from resilient volume and margin performance, efficient working capital management, and lower capex.
Star Cement Ltd
Star Cements Ltd. manufactures and sells cement clinker and cement. It distributes its products in India’s northeastern and eastern states. It is the largest manufacturer of cement in north-eastern India.
In 2005, Star Cement Limited (SCL, formerly known as Cement Manufacturing Company Limited) began operations. It is a producer of cement clinker and cement.
Apart from a 0.78-MMTPA clinker manufacturing unit and a 5.00-MMTPA cement grinding unit owned by SCL, the Group also owns a 0.67-MMTPA cement grinding unit (owned by Megha Technical and Engineers Private Limited-MTEPL), a 2.00-MMTPA clinker manufacturing unit (owned by Star Cement Meghalaya Limited-SCML), and a 51-MW captive coal-based power plant (under Meghalaya Power Limited-MPL).
The Star Group has a total cement production capacity of 5.67 million tonnes per annum (MTPA), with 65 percent of that capacity located in North East India and the rest in Eastern India.SCL owns 100 percent of MTEPL and MPL and 87.49 percent of SCML (with the balance being held by MTEPL).
K C P Ltd
KCP Ltd. is a manufacturer and distributor of cement, sugar, heavy engineering, captive power generation, and hospitality.
Mr. V. Ramakrishna, a first-generation entrepreneur, launched the KCP business in 1941 with the establishment of a sugar unit. The cement division began operations in 1958 and currently operates two units in Andhra Pradesh: one in Guntur (with a capacity of 0.825 MTPA) and one in Muktyala (3.52 MTPA). The heavy engineering branch, founded in 1955 in Chennai’s Tiruvottiyur district, is responsible for the casting, construction, and machining of heavy equipment used in essential industries (sugar, cement, steel, and power).
KCP Vietnam Industries Ltd. began operations in 1999 and currently has a sugar crushing capacity of 11,000 tonnes per day. Additionally, the group operates a 128-room, four-star hotel in Hyderabad called “Mercure,” which opened in April 2016.
For the nine months ending December 2020, the company’s consolidated profit after tax (PAT) was Rs 95 crore on operating income of Rs 1,182 crore, up from Rs 24 crore on operating income of Rs 1,072 crore in the previous fiscal year’s similar period.
NCL Industries Ltd
NCL Industries Ltd. is primarily engaged in the manufacture and sale of cement, ready-mix concrete, cement-bonded particle boards, and doors, as well as the operation of two small hydroelectric projects.
NCL was founded in 1979 by the late Sri K Ramachandra Raju. The company makes several types of cement, cement-bound particle boards, ready-mix concrete, and doors. The operations are being overseen by Mr. K Ravi (the Managing Director).
Initially, NCL Guangzheng was formed as a 70:30 joint venture (JV) between NCL and China’s Quingdao Xinguangzheng Steel Structure Co., Ltd. However, the JV was discontinued in fiscal 2021, and today this business has no operations.
NCL bought TDPL in fiscal 2021 with the intention of establishing a greenfield cement factory on the company’s site near Visakhapatnam, Andhra Pradesh. Currently, the subsidiary has no operations.
Deccan Cements Ltd
Deccan Cements Ltd has been a prominent cement producer in south India since 1979 and commenced commercial production in 1982 at Bhavanipuram in the Telangana district of Nalgonda. The brand is synonymous with the company’s most well-known mascot, “Chamu.”
DCL was founded in 1979 by Mr. M. B. Raju and produces ordinary Portland, Portland Pozzolana, Portland Slag, and specialty cement. The plant in Bhavanipuram, Telangana, is permitted for an annual capacity of 18 lakh tonnes. The corporation has operations in Telangana, Andhra Pradesh, Tamil Nadu, Kerala, and Karnataka and is listed on both the Bombay and National Stock Exchanges. Ms. P. Parvathi is in charge of operations.
Financial flexibility is facilitated by healthy net worth and a strong capital structure. Annual net cash receipts are estimated to be between Rs 120 and 130 crore in fiscal years 2022 and 2023, compared to an annual debt obligation of approximately Rs 18 crore. Bank limit utilization was 23% throughout the 12-month period ending August 2021.
A healthy unencumbered cash balance of Rs 270 crore as of today ensures liquidity; the majority of it is scheduled to be used for planned capital expenditure. The current ratio of 2.01 times as strong as of March 31, 2021, but may moderate in the medium future due to continuous spending.
Anjani Portland Cement Ltd
Anjani Portland Cement is a premium cement maker.
Anjani Portland Cement Limited (APCL) was founded in 1983 by Syed Badruddin Shez, Naseeruddin, and two non-resident Indians. The company was renamed Shez Cements Limited in 1985. K.V. Vishnu Raju acquired the company in 1999 and renamed it APCL.
In March 2014, Chettinad Cement Corporation Private Limited (CCCL) purchased 75% of the total shares of APCL. APCL produces three types of cement: Portland Cement (OPC), Portland Pozzolana Cement (PPC), and Composite Cement (CC). In FY20, OPC (43 & 53 grade) accounted for approximately 78 percent of total sales, followed by PPC (14%), and CC (8%).
As of March 31, 2020, APCL’s installed capacity at its manufacturing facilities in Telangana’s Suryapet area was 11,60,000 TPA. Additionally, the company owns and operates captive thermal power plants with a combined capacity of 16 MW as of March 31, 2020. APCL sells its cement under the brand name “Anjani” and has an approximately 1,500-strong dealer network spread over the southern states. APCL also began trading in cement in Q2FY19.
Saurashtra Cement Ltd
Saurashtra Cement Limited is a cement producing and distribution company. It sells cement under the “HATHI” brand name. The company is a subsidiary of the Mehta Group, which also owns Gujarat Sidhee Cement Limited, a cement and building products company.
At the age of 13, Mr. Nanji Kalidas Mehta, the company’s founder, departed his own land aboard a country vessel destined for Africa. He brought an adventurous spirit, a resolve to succeed, and little more than his dreams with him. The year was 1900, and the local tribes used cowrie shells as currency.
The Mehta Group grew out of these remarkable yet modest beginnings.
Today, the Mehta Group oversees over $500 million in assets and employs over 15,000 people worldwide. It is a multinational, multi-business corporation with operations on three continents: Asia, the United States of America, and Africa.
Keerthi Industries Ltd
In 1982, V C Brahamanna and his friends founded Keerthi Industries Ltd. in Hyderabad as Suvarna Cements Ltd. It is engaged in the manufacturing and distribution of cement and clinker in India.
In May 1982, the late Mr. J. S. Krishna Murthy formed Keerthi Industries Limited (KIL) as Suvarna Cements Limited. Later, in 2000, the company was acquired by Mrs. J. Triveni (executive chairperson) and Mr. J. S. Rao (Managing Director and Chief Financial Officer).
KIL manufactures specialty cement in grades 43 and 53, namely Ordinary Portland Cement (OPC) and Pozzolana Portland Cement (PPC). The cement manufacturing facility has an installed capacity of 594,000 tonnes per annum (TPA) and is located in Telangana’s Nalgonda district. Suvarna Cements is the brand name under which KIL sells cement. In 2005, the company expanded into wind energy and electronics, as well as changing its name to Keerthi Industries Ltd.
In 2006-07, KIL established a 1.5 MW wind energy facility in Karnataka’s Hassan district. KIL’s wind energy division is operated and maintained by Suzlon Energy Limited. In 2010, one of the group’s enterprises, Hyderabad Flextech Ltd. (HFL), joined with KIL.
HFL was founded in December 1992 as a 100 percent export-oriented unit (EOU) (under the Electronic Hardware Technology Park Scheme) and is involved in the manufacture of printed circuit boards (PCBs) as part of KIL’s electronics business. The plant is known as the Balanagar Power Plant and is located in Balanagar, Hyderabad, Telangana.
The government has been allowing private sector investment programs in order to assist them in thriving in business. Several of the government’s recent projects include the following:
Mr. Narendra Modi, Prime Minister, launched the “PM Gati Shakti-National Master Plan (NMP)” for multimodal connectivity in October 2021. Gati Shakti will leverage synergies to build India’s first world-class, seamless multimodal transportation network. This will increase cement consumption in the future.
In July 2021, the government established a 25-member council for the cement sector (including UltraTech Cement MD Mr. K C Jhanwar and Dalmia Bharat Group CMD Mr. Puneet Dalmia) to decrease waste, maximize production, improve quality, cut costs, and promote product standardization.
Eastern India is anticipated to be a new and untouched market for cement businesses in the future, contributing to their bottom lines. Within the next decade, India has the potential to become the world’s largest supplier of clinker and grey cement to the Middle East, Africa, and other developing countries.
Cement facilities located near ports, such as those in Gujarat and Visakhapatnam, will have an added edge in terms of exports and will be logistically well-equipped to compete with cement factories located in the interior of the country. By 2025, India’s cement capacity is estimated to reach 550 MT.
Due to growing demand in a variety of sectors, including housing, commercial construction, and industrial development, the cement industry is predicted to reach 550–600 million tonnes per annum (MTPA) by 2025.
Due to the high-profit margins and stable demand, a number of foreign players are projected to enter the cement market.
The demand for the Cement sector has just begun. This high demand for Infrastructure and the need for such developments clubbed with the Indian government’s interest in various infrastructural initiatives. Hereon, a quality Cement company will bring in multi-bagger returns for investors.
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