Tushar Chaudhari, Research Analyst, Prabhudas Lilladher, said, “India Cements has 14.5mtpa cement capacity (5mtpa in Telangana, 6mtpa in Tamil Nadu, 2.1mtpa in AP, and 1.5mtpa in Rajasthan) along with 11.13mtpa clinker capacity; which complements well with UTCEM’s Southern capacities if UTCEM is able to crack a deal with ICEM promoters in future. UTCEM has 2mtpa in Telangana, 5mtpa in Tamil Nadu, 10.6mtpa in AP.
This deal can be mutually beneficial for UTCEM and ICEM as UTCEM can work of strategic cement supply agreement to gain market share in undersupplied AP/Telangana belt and ICEM’s financial performance can also improve as volume improves.
We believe consolidation is expected to continue in the cement space with industry leaders having strong balance sheets; competition is also expected to increase with players trying to gain market share. Near term demand remains muted and expected to improve post monsoon. Pricing is also expected to improve once demand recovers substantially from 2HFY25E. We remain positive on industry leaders as we expect both UTCEM and ACEM would keep gaining market share with things are going to get difficult for inefficient smaller players.