Adani Group aims for 20% market share in Indian cement industry by 2028
Upstox
2 min read • Updated: April 15, 2024, 2:50 PM
Summary
The cement industry in India is expected to grow at a CAGR of 7-8%. Adani Cement, the parent company of Ambuja Cements and ACC Ltd, is targeting one-fifth market share on the back of infrastructure demand, group synergies, and supply of raw materials at competitive prices.
Adani Cement aims to increase its market share from 14% to 20% by FY28 through an internal accruals-driven capex program. Adani Cement’s capacity is expected to rise at an accelerated rate of 16% to 140 million tonnes per annum by 2028, according to an investor presentation filed with NSE by Ambuja Cements.
The company expects cement demand from the infrastructure segment to grow from 24% - 25% in FY23 to 25% - 29% in FY28. It believes infrastructure demand will be backed by the development of new economic corridors, a strong banking industry, and the government’s National Infrastructure Pipeline.
Adani Cement plans to ramp up its capabilities by sorting out the supply and availability of its key requirements, such as fly ash and limestone. It has secured 40% of its fly ash requirements under a long-term arrangement, which will be further increased to more than 50% by 2028. It has an aggregate of about 8,000 million tonnes of limestone reserve in possession at nil to nominal premium.
Adani Cements said it remains debt-free with a net worth of ₹43,000 crore. It has cash and cash equivalents of ₹8,591 crore as of December 31, 2024.
Ambuja Cements also highlighted market consolidation trends in its investor presentation with increased M&A activities. Adani Cement recently closed the acquisition of Sanghi Industries. This comes weeks after the Adani family-infused ₹6,661 crore into Ambuja Cements and increased its stake to 66.71%.
Also read: Adani family infuse ₹6,661 crore in Ambuja Cements, raises stake to 66.7%
In the next 5 years, demand in the Indian cement industry is expected to grow by 8% - 9%. The Adani Group owns Ambuja Cements and its unit ACC Ltd, and it counts Aditya Birla Group’s Ultratech Cement as its peer.
Shares of Ambuja Cement were trading 0.69% higher at ₹613.05 on Monday, they pared intraday gains to trade 0.04% higher at ₹609.1 on NSE. The stock touched its 52-week high on April 4, 2024, at ₹640.80 and recorded its 52-week low of ₹373.35 on April 24, 2023. Meanwhile, shares of ACC Limited were trading 0.46% lower on Monday at ₹2,457.05 on NSE.