The Indian cement sector continues to be a pivotal driver of economic growth, playing a central role in infrastructure development, housing, and construction. With the government’s strong push for infrastructure projects under initiatives like Pradhan Mantri Awaas Yojna (PMAY) and the expansion of roads, railways, and housing, the sector holds immense growth potential. Although the cement sector posted a modest growth of 2-3% in Q1FY25, largely due to the Lok Sabha elections, industry experts like ICRA are forecasting a robust 7-8% growth for the full financial year, driven by surging demand from infrastructure and housing projects.
Key industry players, including UltraTech Cement, ACC-Ambuja, Shree Cement, and Dalmia Cement, are expected to boost their capacities by over 42 million tonnes by FY26, thereby increasing their combined market share from 48% in FY23 to 54% by FY26. This growth trajectory sets the stage for sustained dominance in the sector, with ACC Cement emerging as a notable contender. ACC Cement, which currently produces 89 million tonnes per annum (MTPA), has been expanding aggressively, having added 22 MTPA in the past two years. By the end of FY25, the company is expected to surpass 100 MTPA, with a longer-term goal of reaching 140 MTPA by FY28. This growth is supported by ongoing projects, with 21 MTPA already under execution.
In terms of operational efficiency, ACC has demonstrated impressive cost control, reducing its expenses by 18% since September 2022 through strategic investments in operations and infrastructure. The company’s cost leadership position strengthens its competitive edge and profitability. ACC’s Q3 2024 financial results reflect the company’s operational excellence. EBITDA (excluding other income) rose by 57.8% year-on-year (YoY) to ₹677 crore, while its net profit surged by 64.1% YoY to ₹384 crore. These strong results underscore the company’s ability to capitalize on market opportunities and improve its financial performance.
ACC has established a strong geographical presence across 31 states and union territories, covering about 75% of India’s 625+ districts. The company’s operations in the southern and eastern regions are particularly robust, with a well-integrated network of plants, terminals, and distribution channels. This extensive presence gives ACC a significant advantage in catering to the increasing demand for cement in infrastructure and housing projects across the country. KR Choksey, a leading brokerage, has issued a “BUY” recommendation for ACC Cement, with a price target of ₹2790, representing an upside potential of 24% from the current market price. Despite a slight miss in EBITDA expectations in Q2FY25, the brokerage maintains a positive outlook on the company’s long-term growth prospects, driven by strong volume growth and improved operational efficiency.
With its impressive financial growth, strategic geographical presence, and expansion plans, ACC Cement stands out as a strong contender in the Indian cement industry. Its cost leadership, coupled with a solid market position, makes it a compelling investment opportunity. The positive outlook and potential for significant returns make ACC Cement a stock to watch for investors seeking long-term growth in the cement sector.
