Best Cement Stocks in India Based on 5Y CAGR

In the world of investing, certain sectors offer a blend of stability and growth potential that can appeal to seasoned investors and newcomers alike. One such sector is the cement industry. As a fundamental component of construction and infrastructure, cement plays a crucial role in shaping our built environment—from towering skyscrapers and sprawling residential communities to essential roadways and bridges. In 2023, the market size of India’s cement industry reached 3.96 billion tonnes and is likely to touch 5.99 billion tonnes by 2032, exhibiting a CAGR of 4.7% during 2024-32.

Investing in cement stocks presents a unique opportunity to capitalise on the construction industry’s cyclical nature while benefiting from the steady demand for this vital material. In the article below, we will explore the best cement stocks based on 5Y-CAGR

Note: The above stocks have been selected from the Nifty 500 universe and sorted based on 5Y CAGR as of August 07, 2024.

Let us now have a look at a brief overview of these cement stocks:

1. J.K Cement Ltd: JK Cement Ltd manufactures and sells cement and cement-related products. The company has over four decades of experience in cement manufacturing and is an affiliate of the multidisciplinary industrial conglomerate JK Organisation. As of June 30, 2024, the company has a Grey Cement Capacity of 24.34 MTPA, White Cement & Wall Putty Capacity of 3.05 MTPA and Coal Based Captive Power Capacity of 77.50 MW.

Key Metrics

• ROE: 15.9%
• ROCE: 15.8%
• Dividend Yield: 0.35%

2. India Cements Ltd: India Cements Ltd is a leading cement manufacturing company headquartered in Chennai. While retaining cement as its mainstay over the years, India Cements has ventured into related fields like shipping, captive power, and coal mining that have purposeful synergy with the core business. Recently, UltraTech Cement, owned by the Aditya Birla Group, has approved the acquisition of a 32.72% equity stake from the promoters and their associates in India Cements. UltraTech had previously invested in India Cements to buy a 22.77% stake at ₹268 per share in June 2024.

Key Metrics

• ROE: -4.72%
• ROCE: -0.73%
• Dividend Yield: 0.00%

3. Grasim Industries Limited: Grasim Industries Limited is the flagship company of the Aditya Birla group and ranks amongst India’s largest private-sector companies. On a standalone basis, GIL’s core businesses comprise viscose Staple fibre (VSF), caustic soda, speciality chemicals, and rayon-grade wood pulp (RGWP), with plants at multiple locations. Cement added 13.8 mtpa grey cement capacity across locations, which took the total India grey cement capacity to 140.8 mtpa for FY24.

Key Metrics

• ROE: 6.90%
• ROCE: 9.30%
• Dividend Yield: 0.37%

4. RHI Magnestia India Ltd: RHI Magnestia India Ltd, earlier known as Orient Refractories Limited (ORL), is in the business of manufacturing and marketing special refractory products, systems

and services to the steel industry in India and Globally. For FY24, the company’s cement capacity reached 537kt.

Key Metrics

• ROE: 4.04%
• ROCE: 8.41%
• Dividend Yield: 0.44%

5. Ambuja Cements Ltd: Ambuja Cements Ltd. is among the leading cement companies in India and a member of the Adani Group. Currently, Ambuja Cement operates its business via six integrated cement manufacturing plants and 8 cement grinding units across the country. As of Q1 FY2025, the capacity utilisation stood at 80% and the capacity reached 88.9 MnT.

Key Metrics

• ROE: 10.3%
• ROCE: 14%
• Dividend Yield: 0.32%

Cement Industry Overview

India produces more than 8% of the installed capacity of cement worldwide, making it the second-largest manufacturer in the world. The cement market in India was valued at 3.96 billion tonnes in 2023 and is projected to grow to 5.99 billion tonnes by 2032, with a compound annual growth rate (CAGR) of 4.7% from 2024 to 2032. The Indian cement sector is moving forward with plans for capacity additions and growth, even though it is anticipated that demand will remain muted during the first half of FY25.

Conclusion

The growth of the cement industry is directly aligned with the growth of construction and infrastructure. Investing in cement stock may help you diversify your portfolio. However, it is necessary to do proper research before investing. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.