Vaibhav Agarwal of PhillipCapital reviews the first quarter that ended on July 31, 2017 and takes a peep into the next quarter.
In general, the cement market will see little or no improvements in Q2. It will continue to have negative demand and price corrections of Rs 200 to 400 per tonne may take place.
We suggest any stock price corrections should be considered a good buying opportunity.
While, UltraTech is hard pressed to generate volume after taking over Jaypee plants, it is also facing challenges in adopting Jaypee’s distribution network. It appears to be losing its premier position after acquiring Jaypee plants. Capacity utilisations of acquired Jaypee units need to be taken up to 50 plus percent. Currently it is throttled at 25 to 30 per cent that needs to be taken up as early as possible. The timing of Jaypee’s plant acquisition has not worked in its favour. Given these unprecedented challenges, we still give UltraTech the benefit of doubt and recommend buy whenever possible.
The inside information at ACC; which is a dark horse, indicates that significant changes are ahead in terms of management and strategies. Our checks suggest that the ongoing evaluation of its merger with Ambuja implies huge transaction costs in form of stamp-duty fees, transfer charges, etc. This is also a major challenge, especially from ACC’s perspective for sustaining valuations.
ACC’s management is focused on addressing its cost concerns. Generally the performance goes down in the second half of the year. ACC is currently trading at a 20 to 30 per cent discount to other large-cap companies. The merger between ACC and Ambuja should take place in the next 12 months. It will save distribution and manpower costs. The demand for Q2 is going to remain subdued. The issues like to GST, RERA, sand-mining needs to be handled correctly. The rural demand is then likely to pick up, while Ambuja is a play on its expected merger with ACC.
The demand pick up in the cement sector is going to happen from the rural segment. Infrastructure demand revival is still away and can be seen only in FY19. Also, next fiscal being a pre-election time, demand pull is more likely to happen. While our top pick UltraTech, we maintain our rating a wait-and-watch approach for ACC.
Considering the opportunity for acquisitions still available both organic / inorganic growth will be seen in the next two to three quarters. Sizable assets in north and west India are there for sale and could be acquired by leading manufacturers within next year. Dalmia Bharat seems to be ahead in the race as it will help the company to get acknowledged as a pan- India player. Right now the company is into a brand building exercise and pushing its volume. It has a positive sentiment among the dealer network. On the other hand, Shree Cement will continue to deliver volume growth, to touch a volume of plus 40 million tonne (+50 per cent of current capacity) by the end of FY19. It is understood that Shree Cement will start trial marketing in south region from January 2018, as it is going to commission its grinding unit in Karnataka with clinker supplied through its Chhattisgarh unit. Stock price corrections are a buying opportunity.
Though we expect near-term pain, the sector’s outlook looks positive from Q3. We reiterate buy on our top picks as stated above.
Jignesh Kundaria, Director and CEO, Fornnax Technology
India is simultaneously grappling with two crises: a mounting waste emergency and an urgent need to decarbonise its most carbon-intensive industries. The cement sector, the second-largest in the world and the backbone of the nation’s infrastructure ambitions, sits at the centre of both. It consumes enormous quantities of fossil fuel, and it has the technical capacity to consume something else entirely: the waste our cities cannot get rid of.
According to CPCB and NITI Aayog projections, India generates approximately 62.4 million tonnes of municipal solid waste annually, with that figure expected to reach 165 million tonnes by 2030. Much of this waste is energy-rich and non-recyclable. At the same time, cement kilns operate at material temperatures of approximately 1,450 degrees Celsius, with gas temperatures reaching 2,000 degrees. This high-temperature environment is ideal for co-processing, ensuring the complete thermal destruction of organic compounds without generating toxic residues. The physics are in our favour. The infrastructure is not.
Pre-processing is not the support act for co-processing. It is the main event. Get the particle size wrong, get the moisture wrong, get the calorific value wrong and your kiln thermal stability will suffer the consequences.
The Regulatory Push Is Real
The Solid Waste Management (SWM) Rules 2026 mandate that cement plants progressively replace solid fossil fuels with Refuse-Derived Fuel (RDF), starting at a 5 per cent baseline and scaling to 15 per cent within six years. NITI Aayog’s 2026 Roadmap for Cement Sector Decarbonisation targets 20 to 25 per cent Thermal Substitution Rate (TSR) by 2030. Beyond compliance, every tonne of coal replaced by RDF generates measurable carbon reductions which is monetisable under India’s emerging Carbon Credit Trading Scheme (CCTS). TSR is no longer a sustainability metric. It is a financial lever.
Yet our own field assessments across multiple Indian cement plants reveal a sobering reality: the primary barrier to scaling AFR adoption is not waste availability. It is the fragmented and under-engineered pre-processing ecosystem that sits between the waste and the kiln.
Why Indian Waste Is a Different Engineering Problem
Indian municipal solid waste is not the material that imported shredding equipment was designed for. Our waste streams frequently exceed 40 per cent to 50 per cent moisture content, particularly during monsoon cycles, saturated with abrasive inerts including sand, glass, and stone. Plants relying on imported OEM equipment face months of downtime awaiting proprietary spare parts. Machines built for segregated, low-moisture waste fail quickly and disrupt the entire pre-processing operation in Indian conditions.
The two most common failures we observe are what I call the biting teeth problem and the chewing teeth problem. Plants relying solely on a primary shredder reduce bulk waste to large fractions, but the output remains too coarse for stable kiln combustion. Others attempt to use a secondary shredder as a standalone unit without a primary stage to pre-size the feed, leading to catastrophic mechanical failure. When both stages are present but mismatched in throughput capacity, the system becomes a bottleneck. Achieving the 40 to 70 tonnes per hour required for meaningful coal displacement demands a precisely coordinated two-stage process.
Engineering a Made-in-India Answer
At Fornnax, our response to these challenges is grounded in one principle: Indian waste demands Indian engineering. Our systems are built around feedstock homogeneity, the holy grail of kiln stability. Consistent particle size and predictable calorific value are the foundation of stable kiln combustion. Without them, no TSR target is achievable at scale.
Our SR-MAX2500 Dual Shaft Primary Shredder (Hydraulic Drive) processes raw, baled, or loosely mixed MSW, C&I waste, bulky waste, and plastics, reducing them to approximately 150 mm fractions at throughputs of up to 40 tonnes per hour. The R-MAX 3300 Single Shaft Secondary Shredder (Hydraulic Drive), introduced in 2025, takes that primary output and produces RDF fractions in the 30 to 80 mm range at up to 30 tonnes per hour, specifically optimised for consistent kiln feeding. We have also introduced electric drive configurations under the SR-100 HD series, with capacities between 5 and 40 tonnes per hour, already operational at a leading Indian waste-processing facility.
Looking ahead, Fornnax is expanding its portfolio with the upcoming SR-MAX3600 Hydraulic Drive primary shredder at up to 70 tonnes per hour and the R-MAX2100 Hydraulic drive secondary shredder at up to 20 tonnes per hour, designed specifically for the large-scale throughput that higher TSR ambitions require.
The Investment Case Is Now
The 2070 Net-Zero target is not a distant goal for India’s cement sector. It starts today, with decisions being made on the plant floor.
The SWM Rules 2026 are already in effect, requiring cement plants to replace coal with RDF. Carbon credit markets are opening up, and coal prices are not going to get cheaper. Every tonne of coal a cement plant replaces with waste-derived fuel saves money on one side and generates carbon credit revenue on the other. Pre-processing infrastructure is no longer just a compliance requirement. It is a business investment with a measurable return.
The good news is that nothing is missing. The technology works. The waste is available in every Indian city. The government has provided the policy direction. The only thing standing between where the industry is today and where it needs to be is the commitment to build the right infrastructure.
The cement companies that move now will not just meet the regulations. They will be ahead of every competitor that waits.
About The Author
Jignesh Kundaria is the Director and CEO of Fornnax Technology. Over an experience spanning more than two decades in the recycling industry, he has established himself as one of India’s foremost voices on waste-to-fuel technology and alternative fuel infrastructure.
The World Cement Association (WCA) has announced SiloConnect as its newest associate corporate member, expanding its network of technology providers supporting digitalisation in the cement industry. SiloConnect offers smart sensor technology that provides real-time visibility of cement inventory levels at customer silos, enabling producers to monitor stock remotely and plan deliveries more efficiently. The solution helps companies move from reactive to proactive logistics, improving delivery planning, operational efficiency and safety by reducing manual inspections. The technology is already used by major cement producers such as Holcim, Cemex and Heidelberg Materials and is deployed across more than 30 countries worldwide.
TotalEnergies and Holcim have commissioned a floating solar power plant in Obourg, Belgium, built on a rehabilitated former chalk quarry that has been converted into a lake. The project has a generation capacity of 31 MW and produces around 30 GWh of renewable electricity annually, which will be used to power Holcim’s nearby industrial operations. The project is currently the largest floating solar installation in Europe dedicated entirely to industrial self-consumption. To ensure minimal impact on the surrounding landscape, more than 700 metres of horizontal directional drilling were used to connect the solar installation to the electrical substation. The project reflects ongoing collaboration between the two companies to support industrial decarbonisation through renewable energy solutions and innovative infrastructure development.