Noticed new buildings, roads, railway and metro stations, bridges, factories under construction everywhere you go? Cement is the key ingredient in them all. Makes us wonder what’s up with the cement stocks in India?
What’s the status of the cement industry
India is the 2nd largest cement producer in the world with over 7% of the global installed capacity and is also the 3rd largest consumer. The industry had unfortunately seen a shock due to the COVID19 pandemic – there was a slump in demand and production due to reduced construction activities. The cement stocks in India suffered drops in price accordingly.
However, production and demand has been increasing since 2021 – cement production volumes have increased by 8% in FY22 for the top 16 cement-makers in India. The demand growth is here to stay given the government’s focus on building public infrastructure (dams, transport hubs, industrial clusters etc) and housing projects (e.g. PM Awas Yojana). Therefore, the best cement stocks in India are poised to grow in value in the coming months and years.
Characteristics of the Indian cement industry
- The demand for cement in India comes from the following sources –
- Housing and Real Estate – 65%
- Public Infrastructure – roughly 25%
- Industrial Development – roughly 10%
2.The industry is concentrated among the large companies with the top 6 companies enjoying over 60% of the market share.
3. The P/E Ratio (TTM) of the industry as a whole stands at 27.23.
Future of cement stocks
The future of any cement stock depends on the following factors –
- Cost of raw materials- e.g. cost of limestone, power, fuels, technical textiles.
- Cost of capital in the economy– Cement industry is highly capital intensive, hence a slightly high debt to equity ratio is not uncommon. Therefore, increase in interest rates has a larger negative impact on the profitability of cement companies. Furthermore, higher interest rates means lower ability of consumers to spend on real estate.
- Cost of transportation – Companies need to optimise the locations of their mines (e.g. limestone, coal), manufacturing plants and urban areas (sources of demand) in order to minimise costs. Rising cost of vehicle fuel also contributes to cost of production as well as demand for housing.
- Capacity utilisation levels of companies – It allows us to see whether the production decisions and predictions of the company are optimised for the long run.
- Expansion of the housing finance sector – It will allow more people to buy homes and more real estate projects to be launched.
- Public expenditure on infrastructure – Stations, terminals, roads, bridges, dams, buildings built by government offer a steady source of demand for the industry
List of top 10 cement stocks in India
|Name of the company||Market cap (in ₹cr)||% Change in price in last 1 year|
|Ambuja Cements Ltd.||1,16,071||55.32|
|Ultratech Cement Ltd.||2,08,294||-2.42|
|India Cements Ltd.||7,557||28.98|
|Shree Cement Ltd.||87,344||-7.65|
|Heidelberg Cement India Ltd.||4,626||-8.67%|
|Ramco Cements Ltd.||17,135||-25.35|
|Birla Corp Ltd.||8,024||-28.45|
(Data as per Dec 14, 2022)
Ambuja Cements Ltd.
The products offered by this large cap India-based company include Ambuja Cement, Ambuja Kawach, Ambuja Cool Walls, Ambuja Powercem, Ambuja Compocem among others. The company also has several subsidiaries including MGT Cements Pvt. Ltd., ACC Ltd., Dirk India Pvt. Ltd. etc. A majority share of the company was recently acquired by Mr. Gautam Adani.
Revenue (FY22) – ₹ 28,965 cr
Profit (FY22) – ₹ 2780 cr
Change in profits in FY21-FY22 – 17.54%
P/E Ratio (TTM) – 64.65
Debt-to-Equity – 0.02
Ultratech Cement Ltd.
It is an India-based company that is a market leader in the cement industry. It produces ordinary portland cement, white cement, ready mix concrete, tiles, adhesives, waterproofing products etc. The company’s branded products include Ultratech cement, Ultratech building products, Birla White Cement and White topping concrete.
Revenue (FY22) – ₹ 52,599 cr
Profit (FY22) – ₹ 7,344 cr
Change in profits in FY21-FY22 – 34.43%
P/E Ratio (TTM) – 31.27
Debt-to-Equity – 0.25
The company has two major segments – cement and ready mixed concrete. Within cement, they produce ordinary portland, portland pozollana and portland slag cement. Its subsidiaries include Bulk Cement Corporation (India) Ltd., ACC Mineral Resources Ltd., Singhania Minerals Pvt. Ltd. and Lucky Minmat Ltd.
Revenue (FY21) – ₹ 16,152 cr
Profit (FY21) – ₹ 1,863 cr
Change in profits in FY20-FY21 – 30.27%
P/E Ratio (TTM) – 61.31
Debt-to-Equity – 0.01
India Cements Ltd.
It is an India-based cement company whose brands include Shankar Super Power, Coromandel King and Raasi Gold. It has subsidiaries and associate companies engaged in financial services, sugar, power, transportation, trading and mining.
Revenue (FY21) – ₹ 4,858 cr
Profit (FY21) – ₹ 78.46 cr
Change in profits in FY20-FY21 – -62.09%
P/E Ratio (TTM) – 72.44
Debt-to-Equity – 0.50
Dalmia Bharat Ltd.
While the company produces the usual Portland cement variants, its specialty includes sulphate resistant cement, railway sleeper cement and oil well cement.
Revenue (FY21) – ₹ 11,286 cr
Profit (FY21) – ₹ 816 cr
Change in profits in FY20-FY21 – -30.32%
P/E Ratio (TTM) – 55.48
Debt-to-Equity – 0.22
JK Cement Ltd.
The primary segments of this company include grey cement, white cement (including portland cement variants) and allied products . The company, along with its cement manufacturing units, operates waste heat recovery units and captive power plants.
Revenue (FY21) – ₹ 7,991 cr
Profit (FY21) – ₹ 687 cr
Change in profits in FY20-FY21 – -3.24%
P/E Ratio (TTM) – 39.21
Debt-to-Equity – 1.05
Shree Cement Ltd.
The company’s brands include Bangur Cement, Bangur Power Cement, Roofon Concrete Master Cement, Shree Jung Rodhak Cement, Rockstrong Cement. It has a power segment under which it creates waste heat recovery power, wind power and solar power. Additionally, it produces synthetic gypsum in order to replace natural gypsum in cement production.
Revenue (FY21) – ₹ 15,010 cr
Profit (FY21) – ₹ 2,332 cr
Change in profits in FY20-FY21 – 2.01%
P/E Ratio (TTM) – 54.52
Debt-to-Equity – 0.16
Heidelberg Cement India Ltd.
It is an India-based company producing building materials. It sells its products through two brands Mycem and Mycem Power – while Mycem is a blend of portland clinker, gypsum and other reactive pozzolanic materials, Mycem Power is a superior blend with laminated packaging (to prevent hydration through moisture).
Revenue (FY21) – ₹ 2,297 cr
Profit (FY21) – ₹ 252 cr
Change in profits in FY20-FY21 – -20%
P/E Ratio (TTM) – 25.32
Debt-to-Equity – 0.15
Ramco Cements Ltd.
The company produces different categories of cement in order to mix concrete and dry mortar products – its products include cement, drymix products and Ramco concrete. It also participates in railway tunnelling projects and other projects under PSUs like NTPC.
Revenue (FY21) – ₹ 6,004 cr
Profit (FY21) – ₹ 881 cr
Change in profits in FY20-FY21 -12.37%
P/E Ratio (TTM) – 53.72
Debt-to-Equity – 0.73
Birla Corporations Ltd.
The company has varied segments such as cement, jute and others – jute products being one of its major exports. Its cement is sold under the brands of MP Birla Cement, MP Birla Cement Perfect Plus, MP Birla Cement Rakshak, MP Birla Cement Samrat Advanced, MP Birla Cement Unique, MP Birla Cement Ultimate Ultra, MP Birla Cement Samrat.
Revenue (FY21) – ₹ 7,461 cr
Profit (FY21) – ₹ 399 cr
Change in profits in FY20-FY21 – -36.67%
P/E Ratio (TTM) – 45.34
Debt-to-Equity – 0.77
Now that you have a rough idea of the best cement stocks in India, check out further details of each of the cement stocks through the Angel One app. Open demat account now if you do not have one already.
Disclaimer: This article is written exclusively for educational purposes. The securities quoted are only examples and not recommendations.