Big 4 Indian cement players capacity share to rise to 60%

An additional 90-100 million tonnes are expected over the next two years.

The Indian cement industry achieved a decadal 45 million tonnes high in organic capacity addition during FY2024, bringing its total capacity to 641 million tonnes, according to CareEdge.

An additional 90-100 million tonnes are expected over the next two years, anticipating 234 million tonnes in total. 65% of this will be driven by the top four players, who saw volume growth of around 9% CAGR over FY2014 to FY2024.

Capacity wise, the four had a consolidated market share of 35% in FY2012 which has strengthened to 50%, 40% of which came from mergers and acquisitions (M&A) and inorganic expansion of distressed assets.

As such, the industry saw a spike in M&A with around 18 deals since April 2014.

Large players are aiming to increase their capacities by 50%-200% by 2030 through a combination of organic and inorganic expansions.

In contrast, regional players with moderate capacities and small balance sheet constraints were slower in capacity additions and are putting up their cement assets on sale.

CareEdge said this is also driven by lower market valuation enjoyed by these players compared to the relatively better valuation offered by acquirers. Some regional players’ cement capacities even trade lower than the replacement cost which is in the Rs.8000-11000 per tonne range.

Additionally, the capacity market share of moderate sized cement players, (i.e between 5th largest and 25th largest), reduced from 46% in FY12 to 39% in FY24 whilst the rest of the cement players’ capacity market share dipped from 19% in FY12 to 11% in FY24.

Hence, large cement makers take over regional players as well as struggling companies through competitive bidding under the Insolvency and Bankruptcy Code.

Whilst most of the stressed assets have been acquired, CareEdge anticipates an acceleration in consolidation where other relatively weak mid-size and small assets will be the focus.

“Out of all the markets, we expect the southern market still offers a larger base to get consolidated as it still stands the most fragmented market when compared to other regions despite recent activity seen with Penna, Kesoram, and India Cements announcements,” CareEdge added.

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