Indian cement makers top the valuations charts globally and they can now buy out their Chinese counterparts in all-stock deals despite being much smaller in size, according to a Bloomberg report. The combined market capitalisation of India's top cement makers now stands at $52.5 billion, which is much ahead of the Chinese industry's combined market capitalisation of $48.3 bn. Chinese companies are, however, more than thrice as big as their Indian counterparts in terms of revenues.
Indian companies in the sample taken by Bloomberg for comparison reported combined revenues of $17.1 billion during 2016-17, less than a third of the Chinese industry combined revenues of $56.2 billion.
India’s top cement maker UltraTech Cement is now the world's fifth most valuable cement maker ahead of global biggies such as CEMEX, Anhui Conch and Italcementi. On the other hand, Shree Cement is the world’s most expensive cement stock with price-to-earnings multiple of 103 times and price-to-book value of nearly 10 times. The corresponding ratio for Chinese makers are 23x and 0.95x, respectively.
Collectively, Indian cement makers are now valued at 48 times their net profit in the last financial year on average, nearly double the corresponding valuation ratio of Chinese firms. Globally, cement makers are now valued at 26x their latest annual earnings (net profit) and 1.6x their latest book value or net worth.