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regular-article-logo Friday, 19 July 2024

Market share of top five cement makers to rise to 55% by March 2025: Icra

The Indian cement market is led by Aditya Birla group firm UltraTech Cement Ltd, which has a consolidated capacity of 152.7 Million Tonnes Per Annum (MTPA)

PTI New Delhi Published 13.06.24, 02:32 PM
Representational image.

Representational image. File picture.

Top five domestic cement manufacturers could expand their market share to up to 55% by March 2025, through organic and inorganic expansions, leading to further consolidation, said a report from rating agency ICRA.

Helped by a healthy demand prospect, large companies operating in the cement sector are looking to increase their capacity and maintain market share, it said.

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"ICRA estimates that the market share of the top five cement companies witnessed a steep rise to 54% as of December 2023, from 45% as of March 2015, and expects it to further increase to 55 per cent by March 2025, resulting in consolidation in the cement industry," it said.

While organic growth is expected to continue in the medium-term, cement companies are also preferring the inorganic route to boost capacities rapidly, leading to consolidation in the industry, it added.

"Except the ACC and Ambuja acquisitions by the Adani Group, other mergers and acquisitions (M&As) were largely owing to the cash flow-starved nature of the acquired entity or the group's financial stress," it said.

According to data from the Cement Manufacturers Association, the country has installed a cement capacity of 541 Metric Tonnes (MT).

The Indian cement market is led by Aditya Birla group firm UltraTech Cement Ltd, which has a consolidated capacity of 152.7 Million Tonnes Per Annum (MTPA).

This is followed by Adani Group firm Adani Cement, which owns Ambuja Cement and its subsidiaries ACC Ltd, which has the capacity to produce 77.4 million tonnes of cement annually.

Besides, there are other large players such as Dalmia Bharat, Shree Cements and J K Cement.

According to the report, bulk of the cement produced within a region is usually consumed internally and the excess transported to adjacent regions.

"The consolidation, taking place across India, is primarily led by the eastern and the western regions. The share of the top five cement companies in the eastern and the western regions is estimated to increase to 76–79% in FY2025 from 54 per cent in FY2015," it said.

While the southern region is highly fragmented with only 40 per cent share held by the top five cement players in FY2015.

"This may go up to 50 per cent by FY2025," the report said, adding "the northern and central regions were highly consolidated in the past (65-75 per cent in FY2015) and are expected to remain in the range of 75-85% by FY2025," it said.

It further added that till March 31, 2024, 947 corporate insolvency cases across the sectors were resolved under the Insolvency and Bankruptcy Code (IBC) with an average haircut of 68%.

According to ICRA Vice President and Co-Group Head, Corporate Ratings Anupama Reddy said the credit profile of cement producers are likely to remain stable, driven by healthy growth in operating income, improvement in operating margins and comfortable leverage metrics.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.

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