India's cement sector sees a concrete 2024 with over 10 major deals

With over 10 deals announced in 2024, the cement sector logged the highest number of pacts, including acquisitions and fresh financial investments, in a single calendar year since 2014, with the combined value of investments over $3.5 billion.

During the year so far, 11 deals have been announced, according to Bloomberg data.

Some of them were led by the top two firms in the cement sector in India - UltraTech Cement and Adani-promoted Ambuja Cements- and were concentrated in the South India market.

Most of the deals have increased the concentration of cement assets within the top four companies, even as cement prices remain under pressure.

Besides UltraTech and Ambuja, the other two top firms are Shree Cement and Dalmia Bharat (Cement).

However, these two did not buy any new significant capacity this year.

“The industry is witnessing a significant spike in mergers and acquisitions activity leading to significant consolidation.

"The industry since April 2014 has seen almost 204 million tonnes of capacity changing hands, out of which close to 125 million tonnes capacity deals have been executed between FY23 till November 2024.

"This signifies the increasing intensity of consolidation in recent years,” said Ravleen Sethi, director for CareEdge Ratings.

These deals were finalised in the backdrop of weak cement pricing, and sluggish demand owing to elections and monsoons in the early months of 2024.

For most of the year, cement makers have had several failed attempts at price hike.

Analysts with Nuvama in a December 9 report noted, “We believe prices have bottomed out. However, the chances of any substantial price hikes in the near term remain bleak due to elevated competitive intensity.”

The brokerage firm estimates a volume growth of 4–5 per cent in financial year 2024-2025 (FY25), a sharp deceleration from the nine per cent growth witnessed in FY24.

“While most of the stressed assets have been acquired over the past five years, we anticipate an acceleration in consolidation where other relatively weak mid-size and small assets will be the focus.

"Out of all the markets, we expect the southern market still offers a larger base to get consolidated as it still stands the most fragmented market when compared to other regions despite recent activity seen with Penna, Kesoram, India Cements & Orient Cement announcements,” Sethi said.