Cement demand to fuel consolidation; top 10 firms to add 140 Million Metric Tonnes Per Annum (MMTPA): Moody's

Moody’s Ratings has noted that growing cement demand in India will accelerate consolidation in the sector, with large players acquiring smaller regional firms to boost production capacity in line with rising consumption. Over the past five years, the country’s top 10 cement producers have acquired around 140 Million Metric Tonnes Per Annum (MMTPA) capacity from smaller players, valued at approximately Rs. 89,000 crore (US$ 10.46 billion). Companies with a pan-India presence, such as UltraTech and Ambuja, are expected to continue mergers and acquisitions (M&A), targeting smaller producers with weaker capacity utilisation and profitability. South India, comprising Telangana, Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh, remains the largest cement-producing region with over 200 MMTPA capacity and is more exposed to consolidation than other regions.
Cement demand in India is forecast to grow at a compound annual growth rate (CAGR) of 6-7% through 2030, driven by rising housing needs and government infrastructure spending. To meet this, industry capacity is expected to expand by about one-third in the next five years, adding roughly 200 MMTPA by FY28. The top 10 producers, accounting for 75% of the market, will contribute significantly to this growth, with UltraTech and Ambuja alone responsible for 30% of the capacity additions. Meanwhile, firms such as Shree Cement and Dalmia Bharat will add 50 MMTPA combined, and smaller players like JK Cement and JSW Cement will nearly double their capacity. Despite strong demand prospects, Moody’s cautions that volatility in raw material prices—especially limestone and energy costs—poses profitability risks, with state-level taxes such as the recent Rs. 160 (US$ 1.88) per tonne levy in Tamil Nadu potentially reducing profits by 15-20%. Due to limited domestic supply, the sector’s reliance on imported coal and petcoke further underscores these challenges.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.