Future Consolidation Predicted for Indian Cement Industry Amidst Aggressive Acquisitions

The Indian cement industry is set to see further consolidation as leading players like Adani's Ambuja Cement and Birla's UltraTech pursue aggressive acquisitions. Rating agency Ind-Ra predicts increased competitive intensity, pricing pressure, and growth driven by government infrastructure spending and housing demand recovery.

The Indian cement industry is on the brink of further consolidation, driven by the aggressive acquisition strategies of major players such as Ambuja Cement, backed by Adani Group, and UltraTech from Aditya Birla Group, according to a recent report.

Rating agency India Ratings and Research (Ind-Ra) highlighted that the ambitious medium-term capacity targets of leading companies are unlikely to be met through organic growth alone, pointing to an expected rise in competitive intensity. This dynamic could lead to pricing pressures, widening the gap between industry leaders and smaller players.

The report also forecasted a positive demand uptick in the second half of FY 2024-25, with overall volume growth projected at 5-7%. This growth is anticipated to be fueled by significant government infrastructure investments and a recovery in housing demand, particularly from rural markets. Additionally, cement companies are likely to expand margins due to lower input costs in the latter half of the fiscal year.

(With inputs from agencies.)