Best Cement Stocks in India: Before defining the best cement stocks in India let us visualize the scope of the Indian Cement Industry, Strengths & Risks engaged.
In addition, you can know the top cement companies and the ground realities can help you to opt for the best cement stocks.
The nation revolves around the four best stocks namely
- Shree Cements
- Ultra Tech Cement
- Ambuja Cements
- ACC Cements
Best Cement Stocks in India 2023
Here are the top and best cement stocks to trade/ invest in Indian Stock Market in 2023.
1. Shree Cement Limited
Shree Cement Limited produces 43.4 million tonnes/ 47.4 million tonnes per annum.
It manufactures high-quality cement products such as Ordinary Portland, Portland Pozzolana, and Slag cement.
Shree Cement’s Important measurable parameters:
Share Price (24,333.10 as on February 07, 2023), Market Capital 2,04,569.14 crores, P/B ratio 3.99, P/E ratio 35.76, EPS (198.16), ROE (17.17), ROCE (17.17) P/S 06.09), EV/EBITDA (25.67)
2. Ultra Tech Cement
Headquartered in Mumbai, India, Ultra Tech Cement Limited manufactures gray cement, ready-mix concrete RMC, and white cement.
The company produces a capacity of 116.75 million tonnes per annum and generates over 100 million tonnes overseas.
It has 23 integrated plants, 1 clinkerisation plant, 26 grinding units, and 78 bulk terminals. It operates in Pan India, UAE, Bahrain, and Sri Lanka.
The company has a total manufacturing capacity in India (122.85 MTPA), and its net profit declined 38 percent to INR 1058.20 crore in Q3 FY 23
Remarked as a global cement manufacturer, Ultra Tech sells gray cement, ready mix concrete (RMC), and white cement. The company generates a 121.5 MTPA capacity of UNCL and is heading fast in the cement industry.
Ultratech Cement’s per share value is 7,086.30, Market Capitalisation (204,569.14 cr.), P/B is 3.99, and P/E is 3.99.
In addition, Ultratech Cement’s EPS is 198.16, ROE % (15.27), ROCE (15.17), P/S is 4.04 and EV/EBITDA is 20.72.
3. ACC Limited
In the construction, and building material space, ACC Limited became a major business player and the company was merged with Adani Group in 2020.
In the second quarter of FY2022, the company’s cement production capacity was 36 million tonnes. The company spearheads efforts to improve the ACC capacity from 36 MTPA to 39.3 MTPA.
Further, the company plans to expand operations in central and eastern regions.
In December 2020, the company had performed the highest capacity utilization of 85 percent in the rural/urban areas, and in FY21 it dropped to 78 percent.
4. Ambuja Cements
Ambuja Cements Ltd. became a member of the Adani Group in 2022 and by then Ambuja’s total production was 30 MTPA.
The company achieved this capacity through 6 integrated cement manufacturing plants and 8 cement grinding units in the country.
With its access to the western coastline seaports, it has effective transportation facilities.
In the 3rd quarter, December 31, 2022, the company recorded a profit of INR 368.99 crore, when compared to INR 252.81 crore on December 31, 2021.
The revenue operations recorded a rise of 10 percent from INR 3739.9 crore (previous year) to 4128.5 crores (2022-23. The EBITDA came to INR 715 crore, scoring a margin of 17.5 percent.)
Is it worth investing in the cement industry stocks?
Cement stocks do fluctuate day in and day out but the elements that fundamentally govern the cement prices are to be put in control. At times, these elements hype the cement prices thereby making becoming a big constraint to the end user for its procurement.
Fundamentally, the Cement industry is a capital-intensive industry and the industry promoters must pump in huge cash incentives when it requires.
For instance, in a project that generates 1 metric tonne of cement, the promoter may need to invest at least INR 3 billion. For someone to make a cement company operational, it must begin with 2 metric tonne production, and you need to make at least an investment of INR 600 crores.
The basic raw materials that fall in place are limestone and coal which need to be continually made available for long-term production.
Another important issue is maintenance, it incurs about US $5 per tonne annually and high-value maintenance expenditure.
It is noted that fluctuations in the raw material price and the contracts with the suppliers can derail the production process.
Geographical Positioning of Cement Companies
The cement industry is marked by its regional presence such as North/South/West/East.
A company can gain over its contenders when its expenditure on freight, power consumption, and other fixed charges can be reduced. Hence, it is suggestive that a cement company has its manufacturing units scattered across the nation.
A cement company can have a firm foot in the markets by following the above-stated points. In fact, 60 percent of the procurement is obtained by the top six companies and the remaining 40 percent is maintained by the rest of the active players.
The operating company must keep a note of EBITDA per tonne, top and bottom line growth, RoE, ROCE, etc.
Investors do envisage the capacity utilization levels that a company maintains that renders the company’s efficiency levels.
Strengths/ Risks Involved in Cement Stocks
Demand and Supply Chain:
Viewing the global rise in the Infrastructure sector and the increasing demand in the realtor segment, the government of India has allotted more spending.
The increase in demand has again geared investments in the cement industry as it is the main component in infrastructure building.
In the current situation, you can witness an increase in energy prices and fuel costs and they tend to influence the cement companies in the long run.
The Covid 19 has already caused much harm to the cement industry. Further, any repercussions as an outcome of the virus in the future can damage the cement business cycles.