The market has been at a constant high from start of the FY18, crossing the mark of 10,000 and 33,000 for the first time. Many sectors such as metals, real estate, NBFCs and so on have given good returns in the same period.
We expect cement to support the next growth momentum due to a revival in demand on account of Government focus on improved infrastructure, construction of 100 smart cities and Housing for all 2022 project. Some of the major cement companies to benefit from the Government initiatives are:
UltraTech Cement (UCL) is the largest pan-India cement company with cement capacity of ~89mtpa (85mtpa in India). UCL has a presence in all the regions in India. In FY18, UlltraTech expanded capacity by 25% by acquiring 21.2mtpa from Jaiprakash Associates. UltraTech is a premium brand in most markets in which the company operates. UCL also has 80% stake in Dubai-based Star Cement, which has 3mtpa cement capacity comprising 2.1mtpa in the Middle East (clinker capacity of 2.3mtpa), 0.5mtpa cement grinding capacity in Bangladesh, and 0.4mtpa cement grinding capacity in Bahrain.
Dalmia Bharat Limited (DBL) is the holding company of Dalmia Cement Bharat Limited (DCBL), which together with its subsidiaries has clinker-backed cement capacity of 25mtpa (48% in the southern region and 52% in the eastern region). The company is promoted by the Dalmia group, which has a presence in cement, power, and refractory businesses across the country. We expect the company to also benefit from pickup in housing in the east.
Prism Cement (PCL), part of R Raheja Group, is a prominent and integrated building materials manufacturer. Its revenue consisted of cement - 43%; tiles, bathroom & kitchen (TBK) - 34%, RMC - 23% and Insurance - 1% in FY17. Prism has a cement capacity of ~7mtpa. The company is well positioned in the central region to benefit from demand-supply mismatch due to higher consolidation in the region.
JK Lakshmi Cement
JK Lakshmi Cement, part of JK Group, manufactures and sells cement and other related products. The company has geographical presence in Rajasthan, Gujarat, Chhattisgarh and Haryana, with total standalone capacity of ~10.9 mtpa.
Shree Cement Ltd (SCL) is one of the largest cement producers in North India. Its prominent cement brands include Shree Ultra, Bangur and Rockstrong. It also produces and sells power under the brand name Shree Power and Shree Mega Power. The cement and power segments contribute ~86% and ~14%, respectively, to the revenues in FY17.
The India Cements Ltd
India Cements is a cement producer and distributor with operations concentrated in the southern states of India (installed capacity ~15.7 MTPA). Its capacity spread consists of AP (45%), Tamil Nadu (38%), Rajashthan (10%) and Maharashtra (7%).