Cement is one of the eight core industries in the country. It has traditionally been a very important sector for the country and has seen tremendous progress after independence on account of the constant development in different parts of the country. Cement is used in every infrastructure project whether in rural or urban areas like residential or commercial or industrial projects, roads, railways, etc. The cement sector in the country has seen a huge volume growth over the decades due to the various government initiatives. However, the recent pandemic has slowed the growth in this sector.
Given below is a brief analysis of the cement sector of India and the top stocks in this sector.
The cement sector in India is quite dominant and the country is the second-largest producer of cement in the world. The cement production of the country accounts for more than 7% of the global installed capacity. As per market experts and industry analysis, cement consumption in the country is expected to reach 419.92 million tonnes by FY 2027. However, it is significant to note that the sector as a whole is expected to be increasing by 12% year on year despite the economic slowdown caused due to covid and other factors impacting the sector.
The biggest demand in the cement sector is from the housing sector which accounts for approximately 60% of the demand in the country. The various government initiatives like Pradhan Mantri Jan Awas Yojana and many similar initiatives have aimed at providing affordable housing for all the citizens of the country. This has contributed to the demand for cement in the country as well as other development projects like roadways, railways, new airports, metros, commercial projects, etc. Also, the cement sector in the country is further segregated into various zones which helps the industry experts analyze the sector as well as its growth drivers, limitations, etc. These zones include the North, South, East, West, and Central zone. Among these zones, the south zone accounts for the maximum production capacity in the country of about 33% approximately.
The cement sector being one of the pillars of the economy has seen many government initiatives that have helped not only in boosting the demand in the sector but also has stabilized the prices. Some of the key government initiatives that have boosted the cement sector are highlighted below.
In FY21 the Indian export segment of portland cement, aluminous cement, slag cement, supersulphate cement, and similar hydraulic cement was to the tune of US$ 118.15 million. Also, the FDI inflows in the industry for the manufacture of cement and gypsum products had scaled up to US$ 5.24 billion between April 2000-September 2021. The government has permitted 100% FDI in the cement sector which is expected to push the Indian Cement industry to greater heights.
The government is also aiming to start huge development projects in the easter and the north-eastern part of the country which is often viewed to be neglected even after over 70 years of independence. The export segment of the sector is also being given more impetus and the aim is to become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world. The government along with the private sector is also working towards increasing the cement production in the country to reach 550MT by 2025.
After having a brief overview of the cement sector in the country, let us now look at the key details of the top companies in this segment.
UltraTech Cement is part of the Aditya Birla Group and was incorporated in the year 2000. It is the biggest company in the cement sector in terms of market capitalization. The company is in the production of portland cement, aluminous cement, slag cement, and similar hydraulic cement. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs.1,90,326.46 crores |
| PE Ratio | 29.36 |
| Return on Equity | 13.13 (March 21) |
| Debt Equity Ratio | 0.46 (March 21) |
| Promotor’s Holdings | 59.96% |
| Share price | Rs. 6,668.05 |
| Dividend Yield | 0.56% |
Shree Cements is the second largest company in the cement sector in terms of market capitalization and the third-largest producer of cement in the country with an installed capacity of 43.4 MTPA. The company is engaged in the manufacture of cement and cement products and is one of the low-cost cement producers in the country. The key details of the company are
| Category | Details |
| Market Capitalization | Rs. 94,450 crores |
| PE Ratio | 37.8 |
| Return on Equity | 16.3 (March 21) |
| Debt Equity Ratio | 0.14 (March 21) |
| Promotor’s Holdings | 62.55% |
| Share price | Rs. 26,177 |
| Dividend Yield | 0.23% |
Ambuja Cement is one of the most popular names in the cement industry and has its presence in over 80 countries across the globe. The company is in the business of manufacturing and sale of portland cement, aluminous cement, slag cement, and similar hydraulic cement. The key details of the company are
| Category | Details |
| Market Capitalization | Rs. 74,779.40 crores |
| PE Ratio | 26.90 |
| Return on Equity | 13.21 (March 21) |
| Debt Equity Ratio | 0.00 (March 21) |
| Promotor’s Holdings | 63.19% |
| Share price | Rs. 383.65 |
| Dividend Yield | 1.67% |
This is one of the oldest companies in the cement sector in India and was incorporated in 1936. The company manufactures portland cement, aluminous cement, slag cement, and similar hydraulic cement. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 42,446.49 crores |
| PE Ratio | 25.02 |
| Return on Equity | 13.71 (March 21) |
| Debt Equity Ratio | 0.00 (March 21) |
| Promotor’s Holdings | 54.53% |
| Share price | Rs. 2274.70 |
| Dividend Yield | 2.57% |
Dalmia Bharat is another pioneer in the Indian cement industry and one of the oldest players in this segment. Incorporated in 1935, the company is in the business of manufacturing and sale of cement, lime, and plaster. The key details of the company are tabled below.
| Category | Details |
| Market Capitalization | Rs. 29,516.19 crores |
| PE Ratio | 25.63 |
| Return on Equity | 10.73 (March 21) |
| Debt Equity Ratio | 0.30 (March 21) |
| Promotor’s Holdings | 55.90% |
| Share price | Rs. 1594.70 |
| Dividend Yield | 0.08% |
Cement as a product is very versatile and is used in various segments of construction ranging from housing, pipes, roads, railway, ports, etc. The need for cement on the road to the development of the country means the demand for cement is not going to cease in the near future. Our country has a high quantity and quality of limestone deposits, therefore, the growth potential of the sector is further enhanced. This outlook of the sector as a whole is therefore bright despite the news of economic slowdown, covid pandemic, etc.
The permissible FDI in the cement sector is up to 100% from the automatic route.
South Zone is the largest contributor to the production of cement in India and accounts for approximately 33% of the total production in the country.
The overall production of cement in India for FY 21 stood at 294.4 million tonnes (MT).
The other key companies in the Indian cement sector include JK Cement, Ramco Cement, Birla Corp., Heidelberg Cement, and India Cements Limited, among many others.
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