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Nailing the mega deal

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Adani Group’s takeover of Holcim’s stakes in Ambuja Cement and ACC is touted as the biggest open offer in the history of corporate India.

At the open offer price of Rs 385 per share, using a key industry valuation metric of enterprise value (EV) per tonne, standalone Ambuja Cements NSE has been valued at nearly $299 per tonne. In contrast, ACC at an open offer price of Rs 2,300 per share is valued at about $131.4 per tonne. This reflects the inherent differences in the operational efficiency and thereby performance of the respective companies.


Other leading players in the cement industry, like Ultratech, which has the largest capacity in the sector with nearly 120 million tonnes, is currently valued at the stock markets at nearly $199 per tonne. Shree Cement with a capacity of nearly 47.4 million tonnes is valued at about $223 per tonne. Enterprise value is a measure of the company’s total value, and it is calculated by adding market capitalisation of a company plus its debt and minus the cash in the books.

The standalone Ambuja Cements has one of the highest operating margins in the industry, and in FY 2022, Ambuja Cements standalone operating profit margins were nearly 23 per cent, a decline of 4.6% YoY, on sales of Rs 14,268 crore. Meanwhile, ACC’s standalone operating profit margins were at 18.4 per cent, a fall of nearly 0.9% YoY in the 12 months ended FY 2022. In the case of Ultratech, standalone operating margins were at 22.7 per cent during FY 22, a fall of nearly 4%. Shree Cement recorded a 22.2 percent margin as against 30 percent in the previous year due to surge in power and fuel costs.


It is interesting to compare today’s scenario with the one 10 years ago in September 2012 when ACC was valued at $132 per tonne, similarly, enterprise value per tonne of Grasim and UltraTech was $121 per tonne and $176 per tonne, respectively. In case of Ambuja Cements, the company’s valuation was at $171 per tonne. The 212-million-tonne cement industry then saw major deals at a valuation of as high as $235 a tonne paid by Irish firm CRH for My Home Industries in 2008. Portuguese player Cimpor paid $162 for Shree Digvijay Cement Company in 2007 while Holcim paid $200 for Ambuja Cements.


However, the deal in June 2008 when French firm Vicat paid $100 a tonne for Sagar Cements, was the lowest in the previous years of M&A activities. The story has not changed as event then as now, coal prices rocked the destinies of cement companies. The decline in coal prices from as high as $160 a tonne to as low as $70 a tonne changed fortunes even then.


Coming back to the current scenario, the key problem continues to be the rising prices of pet coke and coal doubling during the year. Cement firms reported single digit sales growth for the second consecutive quarter in January-March driven by gradual demand recovery as well as price hike even as higher costs due to rise in crude oil and coal prices impact profits and margins. Competitive prices are compelling cement makers to explore alternatives to coal.
Over the next few months, the demand for coal and pet coke is expected to slow down while the prices would continue to remain high. Although cement prices have also hiked up, the rise is not enough to make up for the fuel prices. The inability to pass on costs fully to customers remains a primary concern. Now with the RBI raising the repo rate demand is likely to continue to shy away.

Founder & Editor-in-Chief, Pratap Padode

Concrete

Ramco Cements Gets Andhra Pradesh Nod For Quartzite Mining

Approval covers inclusion of quartzite in Nandyal lease

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Ramco Cements Ltd has received approval from the Government of Andhra Pradesh to include quartzite mineral in its existing limestone mining lease in Nandyal district, the company said.

The approval allows Ramco Cements to undertake quartzite mining at Kalavataka and Kotapadu villages in Kolimigundla Mandal, Nandyal district. The company confirmed that the approval was granted on January 3, 2026.

The quantum of mineable quartzite reserves is yet to be assessed. The mineral is proposed to be used for the manufacture of manufactured sand, pozzolanic additives for the cement industry, and for other industrial applications that may be identified in the future.

According to the company, the approval will remain valid until March 10, 2053. The mining operations will be subject to compliance with all applicable terms and conditions under the Mines and Minerals (Development and Regulation) Amendment Act, 2015, along with guidelines and directions issued by the Government of India and the Government of Andhra Pradesh.

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ICRA Sees Steady Cement Demand Growth Ahead

Volumes seen rising 6–7 per cent in FY27 on infra push

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India’s cement industry is expected to record steady growth over the coming years, with cement volumes projected to expand by 6–7 per cent in FY27, supported by sustained demand from the housing and infrastructure sectors, according to a report by rating agency ICRA.

The agency said the sector is likely to maintain healthy momentum after registering growth of 6.5–7.5 per cent in FY26, despite a higher base in the second half of FY25. Cement demand remained strong in the current financial year, with volumes increasing by 8.5 per cent during the first eight months of FY26, driven by robust construction activity across regions.

ICRA expects demand to strengthen further in the second half of FY26 as construction activity accelerates after the monsoon. Continued government focus on infrastructure spending and the possibility of a reduction in goods and services tax on cement are also expected to support demand through FY26 and FY27.

Against this favourable demand backdrop, cement manufacturers are continuing to expand capacity through both organic and inorganic routes to strengthen their market positions. The industry is estimated to add 85–90 million tonnes per annum of capacity during FY26–FY27, including around 43–45 million tonnes per annum in FY26 and a further 42–44 million tonnes per annum in FY27.

Commenting on the outlook, Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings at ICRA, said sector profitability is expected to improve significantly in FY26, supported by better pricing and higher volumes. Operating profit before interest, depreciation, tax and amortisation per tonne is projected to rise to around Rs 900–950 per tonne in FY26, compared with Rs 810 per tonne in FY25.

However, ICRA expects some moderation in earnings in FY27 due to rising input costs. Operating profit per tonne is estimated at Rs 880–930 in FY27, as costs related to pet coke and freight are likely to increase and remain influenced by global crude oil prices and geopolitical developments.

On a regional basis, North and Central India are expected to report capacity utilisation levels above the national average, while the southern region may continue to see relatively moderate utilisation due to existing capacity overhang. ICRA noted that recent merger and acquisition activity in the southern market has helped large players strengthen their regional and pan-India presence.

Overall capacity utilisation for the cement industry is projected to remain stable at around 70–71 per cent in FY27, broadly in line with FY26 levels, albeit on an expanded capacity base.

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GCCA India–NCB Carbon Uptake Report Released at NCB Foundation Day

New report highlights CO? absorption by concrete in Indian conditions

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The Global Cement and Concrete Association (GCCA) India–NCB Carbon Uptake Report was recently released during the 63rd Foundation Day celebrations of the National Council for Cement and Building Materials (NCB). On the occasion, a Gypsum Board Testing Laboratory and a Micro-Characterisation Laboratory were also inaugurated, strengthening India’s research and quality infrastructure for construction materials.

The laboratories were inaugurated by Urmila, Economic Advisor, Department for Promotion of Industry and Internal Trade (DPIIT), and Mohd. Kamal Ahmad, Special Director General, Central Public Works Department (CPWD), in the presence of L. P. Singh, Director General, NCB.

The newly established Gypsum Board Testing Laboratory will support quality assurance and standardisation requirements of the gypsum board industry, particularly in the context of the Gypsum-Based Building Materials (Quality Control) Order, 2024. The Micro-Characterisation Laboratory is equipped with advanced analytical tools for detailed investigation of cementitious and construction materials.

Addressing the gathering, Ms Urmila highlighted NCB’s sustained contributions to research, technology development, quality assurance and capacity building for the cement sector. Shri Mohd. Kamal Ahmad also commended NCB’s role in promoting sustainable construction practices through focused research and development.

The GCCA India–NCB report titled Carbon Uptake by Concrete assesses CO? uptake through carbonation in concrete under Indian conditions. Prepared in collaboration with the Global Cement and Concrete Association (GCCA) India, the study is based on the Tier-I methodology of IVL Swedish Environment Research Institute. It notes that while the cement industry contributes around seven per cent of global anthropogenic emissions, carbon uptake by concrete can partially offset process-related emissions.

The report outlines future actions to improve data robustness, refine estimation methodologies and support integration of carbon uptake into national sustainability and climate reporting frameworks. It will be submitted to the Ministry of Environment, Forest and Climate Change for consideration of inclusion as a carbon sink in India’s National Communications to the UNFCCC.

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