The Cement Industry stands as one of the nation’s key sectors among the eight primary industries. Throughout the country’s history, it has held immense importance for the government, particularly due to its substantial growth in numerous regions since achieving independence.
Cement is an indispensable component in virtually every infrastructure venture, be it in rural or urban settings. It finds application in diverse projects encompassing residential, commercial, and industrial complexes, as well as roadways and railways, among others. The concerted initiatives by the government have notably propelled significant expansion within the country’s Cement industry.
Within this blog post, we delve into the realm of the Indian Cement Stock industry, shedding light on prominent Cement firms in India that are rapidly advancing. So, continue reading to delve deeper into this subject!
The Indian Cement Stocks Industry: An Overview
An Overview of the Indian Cement Stocks Industry India’s burgeoning requirement for Cement and its associated resources is expanding in line with its population growth and extensive infrastructure advancements. As it paves the way for the future, India holds a pivotal position due to its role in global Cement production, contributing to 7% of the world’s total capacity and securing its position as the second-largest Cement producer globally.
During the fiscal year 2020-2021, India’s aggregate Cement production capability recorded a remarkable upswing of 7.8%, reaching approximately 262 million tonnes. This growth becomes even more significant considering the challenging context of the COVID-19 pandemic, which led to industrial and construction contractions and subsequent lockdowns.
IBEF statistics add further weight to this trend, indicating a sustained upward trajectory. Cement consumption is forecasted to scale between 550 and 600 million tonnes by 2025, predominantly driven by the burgeoning demand for residential, commercial, and industrial construction.
Government initiatives aimed at enhancing housing conditions, such as MGNREGA, PM Garib Kalyan Rozgar Abhiyan, and state-level programs like Matir Srisht and public infrastructure projects, have also significantly contributed to the surge in housing demand.
These collective efforts are laying the groundwork for a world-class, integrated multimodal transportation network in India, which will consequently have a positive impact on the Cement sector.
These statistics collectively underscore the advantageous position of the Cement industry in fulfilling India’s rapidly expanding infrastructure requisites. The forthcoming period is poised to witness the inception of more than 100 smart city projects and interrelated infrastructure undertakings, which will further fuel the demand for Cement across the nation.
Factors considered for the selected Cement Stocks
While the cement industry holds a significant position within India, there are specific factors that warrant consideration when contemplating investments.
We have curated the following list of top cement stocks in India based on the following factors:
1. Market Cap
We have chosen only those cement companies whose market cap is greater than 5000 Crore INR.
2. Price to Earning Ratio
Typically, a cement stock’s price-to-earnings ratio tends to decrease as its performance improves.
3. Sales
We have selected cement companies with an Average Sales Growth (3 years) of more than 10%.
4.Profit
The following list consists of cement companies whose Average Profit growth (3 years) > 10%.
Best Cement Stocks to buy in India
JK Lakshmi Cement Ltd
JK Lakshmi Cement Ltd, an integral entity of the JK Group, operates as a prominent manufacturer and supplier of Cement, RMC (Ready-Mix Concrete), and AAC Blocks across several Indian states. With a robust presence, the company strategically owns and operates 7 Cement and clinker plants in Rajasthan, Chattisgarh, Gujarat, Haryana, and Odisha. These facilities collectively contribute to a total Cement capacity of approximately 14 million metric tonnes per annum (MnTPA) and a clinker capacity of about 8.5 million metric tonnes. Impressively, the company achieved an 81% capacity utilization during the fiscal year 2022-2023.
During the same fiscal year, JK Lakshmi Cement embarked on an expansion initiative, adding a remarkable 15.4 million metric tonnes to its capacity. Looking forward to the fiscal year 2023-2024, the company has ambitious plans for an additional expansion of approximately 18 million metric tonnes through the UCWL Line 2 project. Noteworthy is the diverse range of Cement offerings provided by the company, each branded distinctly, including JK Lakshmi Cement, JK Lakshmi PRO, Heavy Duty, JK Sixer, Super Sixer, Gypsum Plaster, Wall Putty, JKL Power Mix RMC, JK Smartblox, Smartserve, and others. The company’s operational prowess is reflected in its captive limestone mines, positioning it as a cost-effective leader in the Cement industry. A standout feature of its operations is self-reliance in fulfilling around 75% of its power needs through captive sources like coal, waste heat recovery (WHR), and solar plants, boasting a combined capacity of 117 megawatts (MW). This strategic energy approach significantly reduces power costs, exceeding utility power rates by a substantial margin of at least ₹3.5-4 per unit.
- Market Cap – ₹ 7,573 Cr.
- Current Price – ₹ 644
- High / Low – ₹ 897 / 451
- Stock P/E – 23.2
- ROE – 13.1 %
Over the course of the previous five years, the company’s sales growth has exhibited a rather lackluster performance, amounting to a modest increase of 11.5%. This trajectory indicates that the company’s revenue generation during this time frame has not demonstrated a particularly robust expansion, implying that there might have been challenges or limitations impacting its ability to achieve more substantial sales growth.
Star Cement Ltd
Engaged in the production and distribution of Cement Clinker and Cement, Star Cements Ltd maintains a significant market presence across the northern and eastern states of India. Particularly prominent in North-east India, the company stands out as a major Cement manufacturer in the region, offering a range of products including Ordinary Portland Cement, Portland Pozzolana Cement, and Anti-rust Cement to meet diverse construction requirements.
Undeniably a key player in the North-east Indian Cement industry, Star Cements Ltd commands an impressive market share of around 23%, highlighting its dominance in the region. In terms of revenue distribution for the initial quarter of the fiscal year 2022-2023, a notable 86% of revenues were derived from trade sales, which encompass sales to distributors and dealers. The remaining 14% of revenues came from non-trade sales, including direct sales to customers. With a robust operational presence spanning six manufacturing facilities, four strategically located in Meghalaya, and one each in Assam and West Bengal, the company’s widespread network enables efficient production and comprehensive coverage of a wide geographical area.
- Market Cap – ₹ 6,445 Cr.
- Current Price – ₹ 159
- High / Low – ₹ 170 / 88.6
- Stock P/E – 23.6
- ROE – 10.8 %
The company boasts a nearly debt-free status, reflecting strong financial health, and has impressively streamlined its working capital needs, reducing days from 49.0 to 25.3 for efficient operations. Nonetheless, considerations arise as the stock trades at 2.67 times its book value, potentially indicating an overvaluation. Despite consistent profits, the absence of dividends raises questions about capital allocation. A slight -0.36% drop in promoter holding suggests ownership changes, and lackluster 10.9% sales growth over five years indicates revenue challenges. With a 11.6% return on equity over three years, the company should focus on improving profitability relative to shareholders’ equity.
Nuvoco Vistas Corporation Ltd
Nuvoco Vista Corporation Ltd (NVCL) holds a significant position in India’s cement and concrete manufacturing industry with an integrated capacity of 22.32 million metric tonnes per annum (MMTPA). As a division of The Nirma Group, renowned for its diverse product portfolio including chemicals, detergents, healthcare items, and real estate development, NVCL’s offerings span cement, Ready-Mix Concrete (RMX), and modern construction materials like adhesives, wall putty, dry plaster, and cover blocks. The Nirma Group’s cement journey began in 2014 with a greenfield plant in Nimbol, followed by strategic acquisitions including Lafarge Holcim’s Indian cement business in 2016 and NU Vista from the Emami Group in 2020.
In the fiscal year 2021-2022, NVCL introduced four new Ready-Mix Concrete products and nine innovative products in the Modern Building Materials division, notably focusing on sustainable solutions. With a consolidated capacity of 23.82 MMTPA, the company operates through 11 cement plants, including integrated units, grinding units, and blending units, complemented by 53 strategically positioned Ready-Mix Concrete plants across India. Impressively, the integrated plants are fortified with waste heat recovery and solar power systems, alongside captive power plants generating a remarkable 105 MW, covering almost 47.74% of the total power requirements.
- Market Cap – ₹ 12,499 Cr.
- Current Price – ₹ 350
- High / Low – ₹ 475 / 288
- Stock P/E – 30.1
- ROE – 4.73 %
Although the company’s financial reports consistently display profits, it opts not to distribute dividends to its shareholders, reflecting a unique approach to capital allocation. Additionally, the company’s interest coverage ratio remains at a lower level, potentially indicating a need for further examination of its ability to meet its interest obligations comfortably. Moreover, the company’s return on equity over the past three years stands at a mere 1.88%, suggesting that the profitability generated in relation to shareholders’ equity has been relatively limited. These aspects collectively underline certain financial dynamics that might warrant careful consideration for the company’s overall financial health and strategic decision-making.
Dalmia Bharat Ltd
Dalmia Bharat is a major player in the Cement Manufacturing and Sales sector with roots dating back to 1939, now standing as India’s fourth-largest cement producer based on installed capacity. Its impressive portfolio encompasses 13 manufacturing facilities spread across India, boasting a collective cement manufacturing capacity of 30.75 million metric tonnes per annum (MnTPA). The company’s notable cogen capacity of 195 megawatts (MW) within its manufacturing plants and a 5-6% market share in the overall Indian cement manufacturing capacity highlight its significant industry presence.
Geographically, Dalmia Bharat’s operations cover critical regions, with 5 plants in the eastern, 4 in the southern, and 4 in the north-eastern parts of India. Notably, it holds a unique distinction as the sole cement company maintaining a presence in all four pivotal eastern states: West Bengal, Bihar, Jharkhand, and Odisha. Offering a comprehensive range of cement variants, including Portland Pozzolona Cement (PPC), Portland Slag Cement (PSC), Portland Composite Cement (PCC), and Ordinary Portland Cement (OPC), the company markets its products under renowned brands such as Dalmia Cement, Dalmia DSP, Konark Cement, Dalmia InfraPro, Dalmia Infragreen, and Dalmia InstaPro. Particularly noteworthy, Dalmia Bharat excels as India’s premier manufacturer of slag cement, exemplifying its expertise in super-specialty cement catering to specialized construction applications, including oil wells, railway sleepers, and airstrips.
- Market Cap – ₹ 37,381 Cr.
- Current Price – ₹ 1,993
- High / Low – ₹ 2,289 / 1,476
- Stock P/E – 34.4
- ROE – 6.97 %
Over the past five years, the company has exhibited commendable profit growth, achieving an impressive compound annual growth rate (CAGR) of 38.5%. However, there are certain areas of concern that warrant attention. Notably, the company’s sales growth has been lackluster during the same period, with an increase of merely 9.56%. Furthermore, the company’s return on equity over the last three years has been relatively low, standing at 7.20%. These aspects highlight the need for a comprehensive analysis to ensure a holistic evaluation of the company’s financial performance and strategic outlook.
Ambuja Cements Ltd
Dalmia Bharat, a prominent figure in the Cement Manufacturing and Sales sector, has a heritage tracing back to 1939 and currently holds the position of India’s fourth-largest cement producer based on its installed capacity. Boasting an extensive portfolio, the company operates 13 manufacturing facilities across India, collectively delivering a remarkable cement manufacturing capacity of 30.75 million metric tonnes per annum (MnTPA). The company’s noteworthy cogen capacity of 195 megawatts (MW) within its manufacturing plants, coupled with a 5-6% market share in India’s overall cement manufacturing capacity, underscores its significant presence in the industry.
Geographically, Dalmia Bharat strategically spans key regions with 5 plants in the eastern, 4 in the southern, and 4 in the north-eastern parts of India. An exceptional achievement is its exclusive presence in all four pivotal eastern states: West Bengal, Bihar, Jharkhand, and Odisha. Offering a diverse array of cement variants, encompassing Portland Pozzolona Cement (PPC), Portland Slag Cement (PSC), Portland Composite Cement (PCC), and Ordinary Portland Cement (OPC), the company markets its products under well-recognized brands including Dalmia Cement, Dalmia DSP, Konark Cement, Dalmia InfraPro, Dalmia Infragreen, and Dalmia InstaPro. Notably, Dalmia Bharat holds a prestigious position as India’s leading manufacturer of slag cement, exemplifying its specialization in super-specialty cement tailored for specific construction applications such as oil wells, railway sleepers, and airstrips.
- Market Cap – ₹ 90,625 Cr.
- Current Price – ₹ 456
- High / Low – ₹ 598 / 315
- Stock P/E – 40.1
- ROE – 10.8 %
The company’s financial position is characterized by its near absence of debt, reflecting a strong fiscal stance. Moreover, it has consistently demonstrated a robust dividend payout ratio of 71.8%, underscoring its commitment to rewarding shareholders.
However, it’s worth considering certain areas of concern. Despite its profitability, the company has experienced lackluster sales growth, with an increase of just 10.5% over the past five years. Furthermore, its return on equity for the last three years stands at a modest 11.0%, potentially indicating room for improvement in utilizing shareholders’ equity for generating profits. Additionally, a noteworthy aspect is that the company’s promoters have pledged 100% of their holding, which could potentially raise questions about their financial obligations and potential impacts on the company’s stability.
ACC Ltd
Established in 1936, ACC Limited stands as an essential component of the LafargeHolcim Group, focusing on Cement and Ready Mix Concrete production and distribution. The company boasts a widespread presence with manufacturing facilities spanning India, predominantly serving the domestic market. Its product offerings encompass Cement, Ready Mix Concrete, Construction Chemicals, and the Dry Mix Range catering to both Retail and Institutional Customers.
Remarkably, ACC Limited possesses a substantial manufacturing capacity, reaching approximately 34.5 million metric tonnes per annum (MMTPA). This capacity is supported by a network of 17 cement plants and 79 Ready Mix Concrete plants strategically located throughout India. For power requirements, the company operates 8 captive power plants, ensuring a reliable and efficient energy supply to sustain its cement production. ACC Limited’s steadfast commitment to its core operations and comprehensive product range reinforces its prominent standing within the industry.
- Market Cap – ₹ 36,687 Cr.
- Current Price – ₹ 1,954
- High / Low – ₹ 2,785 / 1,592
- Stock P/E – 43.2
- ROE – 7.06 %
The company’s financial structure indicates a nearly debt-free status, exemplifying a strong fiscal foundation. Furthermore, it has consistently upheld a robust dividend payout ratio of 32.2%, underscoring its commitment to providing returns to its shareholders.However, there are certain aspects warranting consideration. Despite its operational profitability, the company has encountered subdued sales growth, registering an increase of merely 10.8% over the past five years. Additionally, its return on equity for the previous three years stands at a modest 11.2%, potentially indicating an opportunity for enhancing the utilization of shareholders’ equity to generate more substantial returns.
UltraTech Cement Ltd
UltraTech Cement holds a significant position in the Cement and related products sector, primarily operating within the Indian market. Boasting an impressive installed capacity of 114 million metric tonnes per annum (mtpa) in India, with a capacity utilization rate of 77%, the company’s infrastructure includes 23 integrated plants, 27 grinding units, seven bulk terminals, two white cement and putty plants, and over 100 ready-mix concrete plants.
Noteworthy for its strategic diversity, UltraTech Cement operates across India, the UAE, Bahrain, Bangladesh, and Sri Lanka. Interestingly, no single region contributes to more than 25% of the company’s sales. As the largest cement company in India and the third largest globally (excluding China), UltraTech Cement stands as the sole cement producer outside China with a manufacturing capacity exceeding 100 million metric tonnes per annum (MnTPA) within a single nation. Its product portfolio includes various brands like Ultratech Cement, Ultratech Concrete, Ultratech Building Products, Ultratech Building Solutions, and Birla White Cement, solidifying UltraTech Cement’s influential position in the global cement industry.
- Market Cap – ₹ 2,34,787 Cr.
- Current Price – ₹ 8,133
- High / Low – ₹ 8,501 / 6,005
- Stock P/E – 45.4
- ROE – 9.63 %
The company has consistently upheld a robust dividend payout ratio of 18.7%, reflecting its commitment to rewarding shareholders with healthy returns.However, certain aspects deserve consideration. The stock is currently trading at a valuation of 4.32 times its book value, potentially indicating a relatively higher market price compared to its intrinsic worth. Additionally, the company’s return on equity for the past three years has remained modest at 12.6%, suggesting that there might be room for enhancing the profitability generated from shareholders’ equity.
Shree Cement Ltd
Engaged in the production and distribution of cement and cement-related products, Shree Cement positions itself as one of India’s most efficient and cost-effective producers. It holds the notable status of being the third-largest cement producer in India, with an impressive installed capacity of 46.4 million metric tonnes per annum (MTPA).
Distinguished by its diverse offerings, the company markets cement under brand names such as Roofon, Bangur Power, Shree Jung Rodhak, Bangur Cement, and Rock Strong, encompassing a range of products including Portland Pozzolana Cement, Ordinary Portland Cement, Portland Slag Cement, and AAC Blocks. With an operational footprint that spans 4 fully integrated cement manufacturing plants and 10 grinding units across 10 states within India, Shree Cement demonstrates its substantial cement production capacity of 46.40 MTPA. Additionally, the company showcases its expertise in power generation with a capacity of 771 megawatts (MW). In the fiscal year 2021-2022, Shree Cement achieved a capacity utilization rate of 63.7%, showing a slight decrease from the 65% recorded in the preceding fiscal year.
- Market Cap – ₹ 86,993 Cr.
- Current Price – ₹ 24,111
- High / Low – ₹ 27,049 / 20,150
- Stock P/E – 54.6
- ROE – 7.45 %
The company’s sales growth performance over the last five years has been subpar, demonstrating an increase of merely 11.4%. It’s worth noting that the tax rate appears to be situated at a lower level, which might warrant further investigation into the factors contributing to this particular financial aspect. Moreover, the company’s return on equity for the preceding three years remains relatively modest, with a recorded value of 12.4%. These observations collectively underline certain financial dynamics that could benefit from a deeper analysis to gain insights into the company’s operational and strategic performance.
The Ramco Cements Ltd
Ramco Cements Ltd specializes in the manufacturing of cement, Ready Mix Concrete (RMC), and Dry mortar products, predominantly catering to the Indian domestic market. The company boasts a versatile product portfolio featuring 12 distinct types of cement tailored for diverse applications. Additionally, Ramco Cements engages in the production and sale of dry mix products and Ready Mix Concrete (RMC), providing comprehensive solutions to the construction sector.
Strategically positioned in the South and East regions of India, the company is renowned for its popular cement brand, ‘Ramco Supergrade’, which enjoys significant popularity in the southern part of the country. Operating through 4 integrated cement plants and 6 grinding units scattered across South and East India, Ramco Cements contributes to a combined capacity of 19.4 million metric tonnes per annum (MMTPA). This capacity includes a primary integrated cement plant accounting for 12.20 MMTPA and satellite grinding units that collectively contribute 7.20 MMTPA. Strengthening its self-sufficiency, the company also possesses a captive power capacity of approximately 319 megawatts (MW), with around 126 MW derived from its wind farms. Notably, the company’s total cement capacity distribution is strategically weighted towards the southern region, encompassing 85% of its capacity, while the remaining 15% is situated in the eastern part of India, aligning with its focus on serving the needs of these specific regions.
- Market Cap – ₹ 20,198 Cr.
- Current Price – ₹ 855
- High / Low – ₹ 953 / 634
- Stock P/E – 65.1
- ROE – 5.14 %
Anticipating a promising quarter ahead, the company’s stock is currently trading at a valuation of 2.97 times its book value, hinting at a potential premium relative to its intrinsic worth, while a modest 11.1% return on equity over the past three years indicates possibilities for heightened profitability from shareholders’ equity. Moreover, the company’s use of interest cost as a capitalization strategy and a relatively low dividend payout ratio of 10.3% raise questions about its financial strategies. A comprehensive analysis becomes imperative to holistically assess the company’s financial health and strategic decisions.
J.K CEMENT
Boasting a legacy of more than four decades in the cement manufacturing industry, the company stands as a key player in the production and distribution of Cement and Cement-related products. Operating as an affiliate of the diverse industrial conglomerate JK Organisation, it has honed its expertise in this field. As a prominent figure in the Indian market, the company is a leading Grey Cement manufacturer with a substantial capacity of 14.7 million metric tonnes per annum (MTPA). It has also established itself as a premier White Cement manufacturer with an impressive capacity of 2.8 MTPA, including a facility of 0.6 MTPA located in the UAE. Remarkably, it ranks among the largest producers of White Cement and Wall Putty in India. With a global perspective, the company’s presence spans 36 countries, particularly excelling in White Cement. Catering to international markets, notably the Middle East, it operates a dedicated white cement manufacturing facility in Fujairah, UAE.
The company’s operational infrastructure features 7 grey cement plants strategically positioned across India, enhancing its manufacturing prowess. In addition, it operates two white cement plants, situated in Rajasthan and the UAE, and further expands its offerings with two wall putty plants in Rajasthan and Madhya Pradesh. These elements collectively define the company’s stature in the cement industry, solidified by its extensive experience and global reach under the umbrella of JK Organisation.
- Market Cap – ₹ 25,128 Cr.
- Current Price – ₹ 3,252
- High / Low – ₹ 3,467 / 2,425
- Stock P/E – 65.9
- ROE – 9.48 %
The company has consistently upheld a robust dividend payout ratio of 20.1%, indicating its commitment to providing shareholders with favourable returns.However, certain aspects warrant careful consideration. There is a possibility that the company is employing a strategy of capitalizing the interest cost. Additionally, over the past three years, there has been a decline in promoter holding, marked by a decrease of 12.3%. These observations highlight key financial dynamics that call for comprehensive analysis to gain insights into the company’s operational strategies and potential implications on its ownership structure.
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FAQs
Does investing in cement industry stocks hold value?
Given the escalating population, the persistent demand for residential, commercial, and industrial structures continues to rise. Moreover, the Government of India has laid out an array of infrastructure and housing initiatives such as PM Awas Yojana, further underscoring the perpetually enduring demand for cement. Nevertheless, as an investor, it’s imperative to not solely focus on the sector’s expansion but also consider the growth trajectory of individual companies, aligning it with your investment goals and risk tolerance.
List of best Cement Stocks to buy in India
|
Rank |
Brand Name |
Market Price (in INR rupees) |
Price to Earning Ratio |
|
1 |
JK Lakshmi Cement Ltd |
₹ 7,573 Cr. |
23.2 |
|
2 |
Star Cement Ltd |
₹ 6,445 Cr. |
23.6 |
|
3 |
Nuvoco Vistas Corporation Ltd |
₹ 12,499 Cr. |
30.1 |
|
4 |
Dalmia Bharat Ltd |
₹ 37,381 Cr. |
34.4 |
|
5 |
Ambuja Cements Ltd |
₹ 90,625 Cr. |
40.1 |
|
6 |
ACC Ltd |
₹ 36,687 Cr. |
43.2 |
|
7 |
UltraTech Cement Ltd |
₹ 2,34,787 Cr. |
45.4 |
|
8 |
Shree Cement Ltd |
₹ 86,993 Cr. |
54.6 |
|
9 |
The Ramco Cements Ltd |
₹ 20,198 Cr. |
65.1 |
|
10 |
J K Cements Ltd |
₹ 25,128 Cr. |
65.9 |
Conclusion
Consequently, Cement stocks consistently rank high on the list of considerations for investors. Furthermore, the Cement industry has established a track record of being one of the most steadfast sectors in terms of growth.
While recent occurrences have led to minor fluctuations in Cement stock prices, the sector remains poised for sustained advancement, making it an excellent inclusion for any investment portfolio geared toward long-term prospects.
Ultimately, it is prudent to engage in discussions with a broker and engage in thorough research before making investments in Cement stocks. Given the multitude of well-established entities in the market and the intense competition, it becomes arduous to single out any specific company for endorsement.
What did we learn?
