{"id":9763,"date":"2022-06-07T17:08:20","date_gmt":"2022-06-07T11:38:20","guid":{"rendered":"https:\/\/blogs.univest.in\/?p=9763"},"modified":"2022-10-13T14:45:56","modified_gmt":"2022-10-13T09:15:56","slug":"changing-dynamics-of-cement-industry","status":"publish","type":"post","link":"https:\/\/univest.in\/blogs-2\/changing-dynamics-of-cement-industry\/","title":{"rendered":"Changing dynamics of cement industry"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"9763\" class=\"elementor elementor-9763\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-32c1900 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"32c1900\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-cc21a12\" data-id=\"cc21a12\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-c2a3ca7 elementor-widget elementor-widget-text-editor\" data-id=\"c2a3ca7\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p>India is one of the world\u2019s largest demands driven economy and also the second largest cement market in the world after China. \u00a0India&#8217;s overall cement production capacity was nearly\u00a0545 million tonnes\u00a0(MT) in FY22 which has grown by 85% from 294 MT in FY21. Cement is also a business that is inextricably tied to economic growth, especially in a developing economy like India. With changing dynamics and most of the cement stocks nearing their 52-weeks low, it becomes important to understand the reason for current trends in this sector. Let\u2019s look at fundamentals of top 4 cement manufacturers in India.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/univest.in\/blogs-2\/changing-dynamics-of-cement-industry\/#UltraTech_Cement_only_player_with_positive_YoY_change_in_Net_profits\" title=\"UltraTech Cement, only player with positive YoY % change in Net profits \">UltraTech Cement, only player with positive YoY % change in Net profits <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/univest.in\/blogs-2\/changing-dynamics-of-cement-industry\/#Adani_becoming_the_second-largest_cement_player_in_the_country_after_a_single_acquisition\" title=\"Adani becoming the second-largest cement player in the country after a single acquisition\">Adani becoming the second-largest cement player in the country after a single acquisition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/univest.in\/blogs-2\/changing-dynamics-of-cement-industry\/#Robust_Capacity_Expansion_plans_for_next_5_years\" title=\"Robust Capacity Expansion plans for next 5 years \">Robust Capacity Expansion plans for next 5 years <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/univest.in\/blogs-2\/changing-dynamics-of-cement-industry\/#Our_view\" title=\"Our view:\">Our view:<\/a><\/li><\/ul><\/nav><\/div>\n<h5><span class=\"ez-toc-section\" id=\"UltraTech_Cement_only_player_with_positive_YoY_change_in_Net_profits\"><\/span><strong>UltraTech Cement, only player with positive YoY % change in Net profits <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>The cement sector in India has historically demonstrated an oligopolistic character with few big players dominating almost more than half of the cement manufacturing in India. Domestically, Top four cements manufacturers in India include UltraTech, Shree Cements, Ambuja &amp; ACC. UltraTech is the largest cement manufacturer with a Market cap of Rs 171,000 crores and installed capacity of 120 MTPA (million tonnes per annum) and is followed by Shree cements having market cap of Rs 79,000 crores and installed capacity of 44.4 MTPA. And lastly, we have Ambuja cements and ACC, both of which were subsidiaries of Holcim and were recently acquired by Adani group for $ 10 Bn. They have combined capacity of 70 million tonnes per annum and are now owned by the Adani Group.<\/p>\n<p>\u00a0<\/p>\n<p><em><strong>UltraTech has the largest cement manufacturing capacity which is even greater than the combined capacity of other three players<\/strong><\/em><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-9776 size-full\" src=\"https:\/\/univest.in\/wp-content\/uploads\/2022\/06\/cement1.png\" alt=\"UltraTech has the largest cement manufacturing capacity which is even greater than the combined capacity of other three players\" width=\"603\" height=\"381\" srcset=\"https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement1.png 603w, https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement1-300x190.png 300w\" sizes=\"(max-width: 603px) 100vw, 603px\" \/><\/p>\n<p>\u00a0<\/p>\n<p>From the Q4FY22 results for these companies, it is seen that all four of them have experienced positive revenue growth, but only UltraTech has experienced positive profit growth, with the rest of them experiencing a negative trend in earnings.<\/p>\n<p>\u00a0<\/p>\n<p><em><strong>Revenues grow YoY for the top 4 cement manufacturers in India in Q4FY22<\/strong><\/em><\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-9777 size-full\" src=\"https:\/\/univest.in\/wp-content\/uploads\/2022\/06\/cement2.png\" alt=\"Revenues grow YoY for the top 4 cement manufacturers in India in Q4FY22\" width=\"595\" height=\"355\" srcset=\"https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement2.png 595w, https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement2-300x179.png 300w\" sizes=\"(max-width: 595px) 100vw, 595px\" \/><\/p>\n<p>\u00a0<\/p>\n<p>Analysing the data from Q4FY22 results, UltraTech and Ambuja\u00a0 have shown robust growth in sales in this quarter when compared on YoY basis but on the earnings front it is only UltraTech with 47.61% YoY growth in profits when compared with the other three.<\/p>\n<p>\u00a0<\/p>\n<p><em><strong>UltraTech only player to record positive YoY growth of 47.61% in profits in Q4FY22<\/strong><\/em><\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-9778 size-full\" src=\"https:\/\/univest.in\/wp-content\/uploads\/2022\/06\/cement3.png\" alt=\"UltraTech only player to record positive YoY growth of 47.61% in profits in Q4FY22\" width=\"595\" height=\"408\" srcset=\"https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement3.png 595w, https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement3-300x206.png 300w\" sizes=\"(max-width: 595px) 100vw, 595px\" \/><\/p>\n<p>\u00a0<\/p>\n<p>The primary reason for the declining margins is increase in input costs in the past few months and inability to pass on the cost increase to the consumers. Another significant development in the sector is the entry of Adani Group in the cement industry. From having a zero-market share in cement industry to becoming the second largest player in the Industry after UltraTech has created an unprecedented change on the competitive scenario, with almost all the other players getting cautious and looking to capital expenditure for increasing their current capacities.<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Adani_becoming_the_second-largest_cement_player_in_the_country_after_a_single_acquisition\"><\/span><strong>Adani becoming the second-largest cement player in the country after a single acquisition<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>The Adani Group recently won the race to acquire Swiss cement major Holcim\u2019s stake in\u00a0Ambuja Cements\u00a0and its subsidiary ACC for $10.5 bn. This is the largest ever acquisition ever made by Adani as well as India\u2019s largest-ever M&amp;A transaction in the infrastructure and materials space.<\/p>\n<p>\u201cOur move into the cement business is yet another validation of our belief in our nation\u2019s growth story,&#8221; said Gautam Adani, chairman of the group.<\/p>\n<p>This is one strategic acquisition made by Adani and although Adani is a new player in the market, competitors still fear this move. The reason is the big portfolio of Adani which is going to make the industry way more competitive than it used to be.<\/p>\n<p>Both Ambuja and ACC will benefit from synergies with Adani&#8217;s comprehensive infrastructure platform, particularly in the areas of raw materials, renewable energy, and logistics, where Adani&#8217;s portfolio firms have extensive experience and knowledge. The two companies are expected to increase their margins and ROCE (return on capital employed) as a result of this.<\/p>\n<p>The current market share of major participants of cement industry (ACC and Ambuja together makes 29% &amp; are now owned by Adani)<\/p>\n<p>\u00a0<\/p>\n<p><em><strong>Adani has the second highest market share behind UltraTech post acquisition of\u00a0 ACC &amp; Ambuja Cements from Holcim<\/strong><\/em><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-9779 size-full\" src=\"https:\/\/univest.in\/wp-content\/uploads\/2022\/06\/cement4.png\" alt=\"Adani has the second highest market share behind UltraTech post acquisition of ACC &amp; Ambuja Cements from Holcim\" width=\"599\" height=\"373\" srcset=\"https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement4.png 599w, https:\/\/univest.in\/blogs-2\/wp-content\/uploads\/2022\/06\/cement4-300x187.png 300w\" sizes=\"(max-width: 599px) 100vw, 599px\" \/><\/p>\n<h5><span class=\"ez-toc-section\" id=\"Robust_Capacity_Expansion_plans_for_next_5_years\"><\/span><strong>Robust Capacity Expansion plans for next 5 years <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>Due to changing competitive profile of the industry all the players are speeding up their capacity expansion plans in a bid to counter Adani. With this UltraTech has recently announced a capex plan of Rs 12,886 crore to expand their capacity by 22.6 MTPA through brown field and green field projects. This would entail setting up integrated and grinding units as well as bulk terminals across the country. The capacity expansion would be undertaken at a cost of $76 per tonne of cement and will be a significant milestone in the ongoing transformational journey of\u00a0UltraTech, as said by company officials.<\/p>\n<p>Shree Cements, on the other hand, intends to invest Rs 4,750 crore in expanding its capacity across multiple products as well as establishing a captive solar facility. A total of Rs 4,750 crore would be spent on increasing cement capacity, Rs 500 crore on establishing a state-of-the-art solar power plant, and Rs.700 crore on increasing clinker manufacturing capacity.<\/p>\n<p>Post the acquisition, Adani, is planning to double the capacity within 5 years to reach 140 MTPA. Adani has already invested $10 Bn to acquire stake in Ambuja and ACC and is further planning to invest even bigger amounts to compete with its biggest rival UltraTech.<\/p>\n<p>With increasing growth of infrastructure, the cement production in India is expected to be 800 MT by 2030, according to the Ministry of Power\u2019s Bureau of Energy Efficiency (BEE).<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Our_view\"><\/span><strong>Our view:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>The margin pressure is likely to continue in H1FY23 as variable cost\/ton is expected to remain elevated due to an increase in input costs and inability to pass on the cost increase.<\/p>\n<p>Most of the stocks like UltraTech &amp; Shree Cements are already trading at 52-week low. Investors can consider investing in UltraTech, given its ambitious capex plans and strong financials with a target of Rs 7100 according to some of the brokerages. While taking about the long-term view, investors need to keep a strong check over any correction in Input prices as this will have a significant impact on EBITDA margins and bottom line of the companies.<\/p>\n<p>With the acquisition of Holcim by Adani, the cement sector has come into focus. Will UltraTech retain its leadership position or will Adani challenge that position in a few years is something that market participants will be watching out for.<\/p>\n<p>With the high demand in the country and capacity expansion plans across the board, the next few quarters are likely to be highly competitive for the cement sector with each player trying to gain higher market share.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-a233ad7 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"a233ad7\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0474000\" data-id=\"0474000\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-12d1c75 elementor-widget elementor-widget-text-editor\" data-id=\"12d1c75\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p style=\"background-color: #ffffff;\"><em>Note \u2013 This channel is for educational and training purpose only &amp; any stock mentioned here should not be taken as a tip\/recommendation\/advice<\/em><\/p>\n<p style=\"background-color: #ffffff;\"><em>Research done by:\u00a0Ketan Sonalkar,\u00a0SEBI Rgn No INA000011255<\/em><\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-9d28610 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"9d28610\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-61b42d1\" data-id=\"61b42d1\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-13d9786 elementor-shape-circle e-grid-align-left elementor-grid-0 elementor-widget elementor-widget-social-icons\" data-id=\"13d9786\" data-element_type=\"widget\" data-widget_type=\"social-icons.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-social-icons-wrapper elementor-grid\">\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-facebook elementor-repeater-item-b79fad1\" href=\"https:\/\/www.facebook.com\/Univest.in\" target=\"_blank\" rel=\"nofollow noopener\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Facebook<\/span>\n\t\t\t\t\t\t<i class=\"fab fa-facebook\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-twitter elementor-repeater-item-d960058\" href=\"https:\/\/twitter.com\/InUnivest\" target=\"_blank\" rel=\"nofollow noopener\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Twitter<\/span>\n\t\t\t\t\t\t<i class=\"fab fa-twitter\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-whatsapp elementor-repeater-item-1a41792\" href=\"https:\/\/wa.me\/+919810917800\" target=\"_blank\" rel=\"nofollow noopener\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Whatsapp<\/span>\n\t\t\t\t\t\t<i class=\"fab fa-whatsapp\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-telegram elementor-repeater-item-0a982ac\" href=\"https:\/\/t.me\/Univest_in\" target=\"_blank\" rel=\"nofollow\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Telegram<\/span>\n\t\t\t\t\t\t<i class=\"fab fa-telegram\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-instagram elementor-repeater-item-c9974a4\" href=\"https:\/\/www.instagram.com\/univest.in\/\" target=\"_blank\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Instagram<\/span>\n\t\t\t\t\t\t<i class=\"fab fa-instagram\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-linkedin elementor-repeater-item-6cd9e60\" href=\"https:\/\/www.linkedin.com\/company\/univest-in\" target=\"_blank\" rel=\"nofollow noopener\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Linkedin<\/span>\n\t\t\t\t\t\t<i class=\"fab fa-linkedin\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>India is one of the world\u2019s largest demands driven economy and also the second largest cement market in the world after China. \u00a0India&#8217;s overall cement production capacity was nearly\u00a0545 million tonnes\u00a0(MT) in FY22 which has grown by 85% from 294 MT in FY21. Cement is also a business that is inextricably tied to economic growth,<\/p>\n","protected":false},"author":5,"featured_media":26915,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"class_list":["post-9763","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market"],"metadata":{"_edit_lock":["1665653534:8"],"_edit_last":["8"],"qodef_content_behind_header":["no"],"qodef_show_header_widget_areas":["yes"],"qodef_top_area_header_in_grid":["no"],"_yoast_wpseo_primary_category":["24"],"_yoast_wpseo_estimated-reading-time-minutes":["6"],"_elementor_edit_mode":["builder"],"_elementor_template_type":["wp-post"],"_elementor_version":["3.6.5"],"_wp_page_template":["default"],"_elementor_data":["[{\"id\":\"32c1900\",\"elType\":\"section\",\"settings\":{\"qodef_offset_top\":\"50%\",\"qodef_offset_left\":\"50%\"},\"elements\":[{\"id\":\"cc21a12\",\"elType\":\"column\",\"settings\":{\"_column_size\":100,\"_inline_size\":null},\"elements\":[{\"id\":\"c2a3ca7\",\"elType\":\"widget\",\"settings\":{\"editor\":\"<p>India is one of the world\\u2019s largest demands driven economy and also the second largest cement market in the world after China. \\u00a0India's overall cement production capacity was nearly\\u00a0545 million tonnes\\u00a0(MT) in FY22 which has grown by 85% from 294 MT in FY21. Cement is also a business that is inextricably tied to economic growth, especially in a developing economy like India. With changing dynamics and most of the cement stocks nearing their 52-weeks low, it becomes important to understand the reason for current trends in this sector. Let\\u2019s look at fundamentals of top 4 cement manufacturers in India.<\\\/p><h5><strong>UltraTech Cement, only player with positive YoY % change in Net profits <\\\/strong><\\\/h5><p>The cement sector in India has historically demonstrated an oligopolistic character with few big players dominating almost more than half of the cement manufacturing in India. Domestically, Top four cements manufacturers in India include UltraTech, Shree Cements, Ambuja &amp; ACC. UltraTech is the largest cement manufacturer with a Market cap of Rs 171,000 crores and installed capacity of 120 MTPA (million tonnes per annum) and is followed by Shree cements having market cap of Rs 79,000 crores and installed capacity of 44.4 MTPA. And lastly, we have Ambuja cements and ACC, both of which were subsidiaries of Holcim and were recently acquired by Adani group for $ 10 Bn. They have combined capacity of 70 million tonnes per annum and are now owned by the Adani Group.<\\\/p><p>\\u00a0<\\\/p><p><em><strong>UltraTech has the largest cement manufacturing capacity which is even greater than the combined capacity of other three players<\\\/strong><\\\/em><\\\/p><p><img class=\\\"aligncenter wp-image-9776 size-full\\\" src=\\\"https:\\\/\\\/univest.in\\\/wp-content\\\/uploads\\\/2022\\\/06\\\/cement1.png\\\" alt=\\\"UltraTech has the largest cement manufacturing capacity which is even greater than the combined capacity of other three players\\\" width=\\\"603\\\" height=\\\"381\\\" \\\/><\\\/p><p>\\u00a0<\\\/p><p>From the Q4FY22 results for these companies, it is seen that all four of them have experienced positive revenue growth, but only UltraTech has experienced positive profit growth, with the rest of them experiencing a negative trend in earnings.<\\\/p><p>\\u00a0<\\\/p><p><em><strong>Revenues grow YoY for the top 4 cement manufacturers in India in Q4FY22<\\\/strong><\\\/em><\\\/p><p><img class=\\\"aligncenter wp-image-9777 size-full\\\" src=\\\"https:\\\/\\\/univest.in\\\/wp-content\\\/uploads\\\/2022\\\/06\\\/cement2.png\\\" alt=\\\"Revenues grow YoY for the top 4 cement manufacturers in India in Q4FY22\\\" width=\\\"595\\\" height=\\\"355\\\" \\\/><\\\/p><p>\\u00a0<\\\/p><p>Analysing the data from Q4FY22 results, UltraTech and Ambuja\\u00a0 have shown robust growth in sales in this quarter when compared on YoY basis but on the earnings front it is only UltraTech with 47.61% YoY growth in profits when compared with the other three.<\\\/p><p>\\u00a0<\\\/p><p><em><strong>UltraTech only player to record positive YoY growth of 47.61% in profits in Q4FY22<\\\/strong><\\\/em><\\\/p><p><img class=\\\"aligncenter wp-image-9778 size-full\\\" src=\\\"https:\\\/\\\/univest.in\\\/wp-content\\\/uploads\\\/2022\\\/06\\\/cement3.png\\\" alt=\\\"UltraTech only player to record positive YoY growth of 47.61% in profits in Q4FY22\\\" width=\\\"595\\\" height=\\\"408\\\" \\\/><\\\/p><p>\\u00a0<\\\/p><p>The primary reason for the declining margins is increase in input costs in the past few months and inability to pass on the cost increase to the consumers. Another significant development in the sector is the entry of Adani Group in the cement industry. From having a zero-market share in cement industry to becoming the second largest player in the Industry after UltraTech has created an unprecedented change on the competitive scenario, with almost all the other players getting cautious and looking to capital expenditure for increasing their current capacities.<\\\/p><h5><strong>Adani becoming the second-largest cement player in the country after a single acquisition<\\\/strong><\\\/h5><p>The Adani Group recently won the race to acquire Swiss cement major Holcim\\u2019s stake in\\u00a0Ambuja Cements\\u00a0and its subsidiary ACC for $10.5 bn. This is the largest ever acquisition ever made by Adani as well as India\\u2019s largest-ever M&amp;A transaction in the infrastructure and materials space.<\\\/p><p>\\u201cOur move into the cement business is yet another validation of our belief in our nation\\u2019s growth story,\\\" said Gautam Adani, chairman of the group.<\\\/p><p>This is one strategic acquisition made by Adani and although Adani is a new player in the market, competitors still fear this move. The reason is the big portfolio of Adani which is going to make the industry way more competitive than it used to be.<\\\/p><p>Both Ambuja and ACC will benefit from synergies with Adani's comprehensive infrastructure platform, particularly in the areas of raw materials, renewable energy, and logistics, where Adani's portfolio firms have extensive experience and knowledge. The two companies are expected to increase their margins and ROCE (return on capital employed) as a result of this.<\\\/p><p>The current market share of major participants of cement industry (ACC and Ambuja together makes 29% &amp; are now owned by Adani)<\\\/p><p>\\u00a0<\\\/p><p><em><strong>Adani has the second highest market share behind UltraTech post acquisition of\\u00a0 ACC &amp; Ambuja Cements from Holcim<\\\/strong><\\\/em><\\\/p><p><img class=\\\"aligncenter wp-image-9779 size-full\\\" src=\\\"https:\\\/\\\/univest.in\\\/wp-content\\\/uploads\\\/2022\\\/06\\\/cement4.png\\\" alt=\\\"Adani has the second highest market share behind UltraTech post acquisition of ACC &amp; Ambuja Cements from Holcim\\\" width=\\\"599\\\" height=\\\"373\\\" \\\/><\\\/p><h5><strong>Robust Capacity Expansion plans for next 5 years <\\\/strong><\\\/h5><p>Due to changing competitive profile of the industry all the players are speeding up their capacity expansion plans in a bid to counter Adani. With this UltraTech has recently announced a capex plan of Rs 12,886 crore to expand their capacity by 22.6 MTPA through brown field and green field projects. This would entail setting up integrated and grinding units as well as bulk terminals across the country. The capacity expansion would be undertaken at a cost of $76 per tonne of cement and will be a significant milestone in the ongoing transformational journey of\\u00a0UltraTech, as said by company officials.<\\\/p><p>Shree Cements, on the other hand, intends to invest Rs 4,750 crore in expanding its capacity across multiple products as well as establishing a captive solar facility. A total of Rs 4,750 crore would be spent on increasing cement capacity, Rs 500 crore on establishing a state-of-the-art solar power plant, and Rs.700 crore on increasing clinker manufacturing capacity.<\\\/p><p>Post the acquisition, Adani, is planning to double the capacity within 5 years to reach 140 MTPA. Adani has already invested $10 Bn to acquire stake in Ambuja and ACC and is further planning to invest even bigger amounts to compete with its biggest rival UltraTech.<\\\/p><p>With increasing growth of infrastructure, the cement production in India is expected to be 800 MT by 2030, according to the Ministry of Power\\u2019s Bureau of Energy Efficiency (BEE).<\\\/p><h5><strong>Our view:<\\\/strong><\\\/h5><p>The margin pressure is likely to continue in H1FY23 as variable cost\\\/ton is expected to remain elevated due to an increase in input costs and inability to pass on the cost increase.<\\\/p><p>Most of the stocks like UltraTech &amp; Shree Cements are already trading at 52-week low. Investors can consider investing in UltraTech, given its ambitious capex plans and strong financials with a target of Rs 7100 according to some of the brokerages. While taking about the long-term view, investors need to keep a strong check over any correction in Input prices as this will have a significant impact on EBITDA margins and bottom line of the companies.<\\\/p><p>With the acquisition of Holcim by Adani, the cement sector has come into focus. Will UltraTech retain its leadership position or will Adani challenge that position in a few years is something that market participants will be watching out for.<\\\/p><p>With the high demand in the country and capacity expansion plans across the board, the next few quarters are likely to be highly competitive for the cement sector with each player trying to gain higher market share.<\\\/p>\"},\"elements\":[],\"widgetType\":\"text-editor\"}],\"isInner\":false}],\"isInner\":false},{\"id\":\"a233ad7\",\"elType\":\"section\",\"settings\":{\"qodef_offset_top\":\"50%\",\"qodef_offset_left\":\"50%\"},\"elements\":[{\"id\":\"0474000\",\"elType\":\"column\",\"settings\":{\"_column_size\":100,\"_inline_size\":null},\"elements\":[{\"id\":\"12d1c75\",\"elType\":\"widget\",\"settings\":{\"editor\":\"<p style=\\\"background-color: #ffffff;\\\"><em>Note \\u2013 This channel is for educational and training purpose only &amp; any stock mentioned here should not be taken as a tip\\\/recommendation\\\/advice<\\\/em><\\\/p><p style=\\\"background-color: #ffffff;\\\"><em>Research done by:\\u00a0Ketan Sonalkar,\\u00a0SEBI Rgn No INA000011255<\\\/em><\\\/p>\"},\"elements\":[],\"widgetType\":\"text-editor\"}],\"isInner\":false}],\"isInner\":false},{\"id\":\"9d28610\",\"elType\":\"section\",\"settings\":{\"qodef_offset_top\":\"50%\",\"qodef_offset_left\":\"50%\"},\"elements\":[{\"id\":\"61b42d1\",\"elType\":\"column\",\"settings\":{\"_column_size\":100,\"_inline_size\":null},\"elements\":[{\"id\":\"13d9786\",\"elType\":\"widget\",\"settings\":{\"social_icon_list\":[{\"social_icon\":{\"value\":\"fab fa-facebook\",\"library\":\"fa-brands\"},\"_id\":\"b79fad1\",\"link\":{\"url\":\"https:\\\/\\\/www.facebook.com\\\/Univest.in\",\"is_external\":\"true\",\"nofollow\":\"\",\"custom_attributes\":\"\"}},{\"social_icon\":{\"value\":\"fab 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industry"],"_yoast_wpseo_metadesc":["Cement is also a business that is inextricably tied to economic growth, especially in a developing economy like India."],"_yoast_wpseo_linkdex":["69"],"nectar_blog_post_view_count":["287"],"_schema_ref":["11166"],"_schema_json":["a:12:{s:8:\"@context\";s:19:\"https:\/\/schema.org\/\";s:5:\"@type\";s:11:\"BlogPosting\";s:16:\"mainEntityOfPage\";a:2:{s:5:\"@type\";s:7:\"WebPage\";s:3:\"@id\";s:56:\"https:\/\/univest.in\/changing-dynamics-of-cement-industry\/\";}s:3:\"url\";s:56:\"https:\/\/univest.in\/changing-dynamics-of-cement-industry\/\";s:8:\"headline\";s:36:\"Changing dynamics of cement 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