Market may be pricing in negatives for cement sector as demand stays flat

One key question is, has the market already discounted the negatives and is there too much pessimism about the sector?

Investors are divided on the future of the cement sector. The budgeted infrastructure building programme ensures some offtake, but private sector demand is muted. The entry of Adani Group in the Ambuja Cements-ACC takeover implies higher competitive pressure.

Given the planned capacity additions by many companies, there could be a price war and lower utilisation. At the same time, raw material and fuel prices are stabilising and may have peaked. This means easing margin pressures.

There will be an estimated 90 million tonnes (mt) of capacity added by 2024-25. This is a three-year compound annual growth rate (CAGR) of 5.5