Rating agency ICRA in its latest report has said that backed by healthy demand prospects for the cement sector, large cement companies are looking to increase their capacity and maintain market share through organic and inorganic expansions. ICRA estimates that the market share of the top five cement companies (UltraTech Cement, Adani Group, Shree Cement, Dalmia Cement (Bharat) and Nuvoco Vistas Corporation) witnessed a steep rise to 54% as of December 2023 from 45% as of March 2015, and expects it to further increase to 55% by March 2025, resulting in consolidation in the cement industry.
ICRA said while organic growth is expected to continue in the medium-term, cement companies are also preferring the inorganic route to boost capacities rapidly, leading to consolidation in the industry. Except the ACC and Ambuja acquisitions by the Adani Group, other mergers and acquisitions (M&As) were largely owing to the cash flow-starved nature of the acquired entity or the group's financial stress.
According to the report, bulk of the cement produced within a region is usually consumed internally and the excess transported to adjacent regions. The consolidation, taking place across India, is primarily led by the eastern and the western regions. The share of the top five cement companies in the eastern and the western regions is estimated to increase to 76-79 per cent in FY2025 from 54 per cent in FY2015. While the southern region is highly fragmented with only 40 per cent share held by the top five cement players in FY2015. This may go up to 50 per cent by FY2025. The northern and central regions were highly consolidated in the past (65-75 per cent in FY2015) and are expected to remain in the range of 75-85 per cent by FY2025.
