New Delhi
Large cement companies are looking to grow their capacity and maintain market share due to strong demand in the sector. According to ICRA, companies are expanding both organically and inorganically, through acquisitions and mergers, which is leading to industry consolidation.
The market share of the top five cement companies rose from 45% in March 2015 to 54% in December 2023, and it is projected to reach 55% by March 2025. The eastern and western regions are seeing significant consolidation, with the top five players’ market share expected to increase by 22-25% between 2015 and 2025. Even Southern India, which is more fragmented, may see the top five companies’ share grow from 40% in 2015 to 50% by 2025.
ICRA’s report highlights that consolidation brings benefits such as cost reduction and improved operational efficiency. It allows acquiring companies to quickly gain capacity and access limestone reserves, avoiding the long development times of new plants. Over the past nine years, there have been 15 mergers and acquisitions in the sector, offering cost savings compared to building new facilities.
ICRA maintains a Stable outlook for the cement sector. Revenues are expected to grow by 9-10% in 2024-25, with operating margins improving by 80-100 basis points to around 16.8-17.3%. Although debt levels may rise by 20% to support ongoing capital expenditure, the increase in operating profits should keep debt protection metrics stable.
