With plans to ramp up cement production, firms are exploring potential mergers and acquisition deals in India in 2023

---

Print Email

---

The Indian cement market is poised for an accelerated growth trajectory over the next five years. Mass residential projects, coupled with higher investment in infrastructure projects, have resulted in significant growth opportunities for cement manufacturers in India in 2023. The financial reporting for major cement producers in H1 2023 is also indicative that the market is poised for accelerated growth.

• Dalmia Bharat, for instance, reported that the firm sold 7Mt of cement in Q2 2023. This is an increase of 12% year over year, compared to 6.2Mt in Q2 2022. Furthermore, the firm has also reported significant growth in its revenue during the quarter. The income for Dalmia Bharat surged 10% to reach US$442 million, although profits declined substantially during the period, largely due to higher raw material prices. Going forward, the firm expects commodity prices to decline in H2 2023. This, coupled with higher volumes, will drive the margin for Dalmia Bharat.
• UltraTech Cement, on the other hand, reported an increase of 6.6% in its profits during Q2 2023. The surge in profits comes on the back of strong domestic demand. Notably, the profits increased to US$205.8 million during the period.

The reporting from Dalmia Bharat and UltraTech Cement is an indication that the demand for cement is growing in India and ConsTrack360 expects the trend to further continue in H2 2023 and H1 2024. To tap into the growing demand for cement across India, major players in the sectors have been seeking to expand their production capacities. Consequently, there has been a rapid uptake in mergers and acquisition deals recently in the Indian market.

Dalmia Bharat, for instance, completed the acquisition of Jaypee Group's cement capacity, totaling 9.4 mtpa, in December 2022. Sagar Cements, in February 2023, also received the NCLT nod to acquire Andhra Cements. JK Cement, on the other hand, also acquired a 100% stake in Toshali Cements Private Ltd in June 2023. Other players like Adani Group and JK Lakshmi Cement are also on the lookout for potential acquisition deals in India in H2 2023.

• These two firms, Adani Group-led ACC Cement and JK Lakshmi Cement, are seeking to acquire Sanghvi Cement. The Ahmedabad-based cement manufacturer is being sold for an estimated enterprise value of INR 60 billion.
• Both of these firms are expected to start the due diligence process, and if found satisfactory are projected to place a formal offer over the next two months. Other players like Dalmia Bharat and Nirma Group have also submitted their proposals to acquire Sanghvi Cement.

The acquisition of Sanghvi Cement is a strategic fit for Adani Group, which also acquired ACC and Ambuja Cement for US$10.5 billion in 2022. The deal will enable Adani Group to further strengthen its position in the Indian cement market, which is poised for accelerated growth over the next five years.

For JK Lakshmi Cement, the acquisition will enable the firm to expand its production capacity and tap into the growing cement consumption in the Indian market. The firm has set ambitious targets in the cement sector and is looking to expand its capacity to 30 mtpa going forward.

From the short to medium-term perspective, ConsTrack360 expects more such mergers and acquisition activities to emerge in the Indian market, as big players seek to expand their market share and pan-India presence over the next few years. These activities will keep aiding the competitive landscape in the fast-growing cement market in India from the short to medium-term perspective. Overall, the outlook for the Indian cement market remains robust and ConsTrack360 expects firms to increase their capital expenditure to tap into the growing consumption over the next few years.