Cement stocks decline after UltraTech announces Rs 12,886-crore capex plan

Shares of nine cement makers fell by 1.27% to 6.6% after UltraTech Cement announced a Rs 12,886 crore capex plan as competition grows in cement sector.

Among the cement stocks, J.K Cement (down 6.60%), Ramco Cements (down 4.36%), Shree Cement (down 3.55%), JK Lakshmi Cement (down 3.47%), Nuvoco Vistas Corp (down 2.16%), ACC (down 2.15%), Sagar Cements (down 1.82%), Ambuja Cements (down 1.37%) and Deccan Cements (down 1.27%) declined.

Ultratech Cement on Thursday said that its board has approved capex of Rs 12,886 crore towards increasing capacity by 22.6 MTPA, with a mix of brown field and green field expansion.

 

This would be achieved by setting-up integrated and grinding units as well as bulk terminals. The additional capacity will be created across the country. The capex would be funded via a mix of debt and internal accruals.

Cement firms are already under pressure due to elevated coal prices. The inability to pass-on cost fully to customers remains the primary concern.

A foreign brokerage reportedly said that the lack of strength in deciding pricing trend could hurt smaller cement manufacturers. It also reportedly observed a growing possibility of mergers and acquisitions in the space, especially after the Holcim deal by Adani Group, and UltraTech's expansion - both through brownfield and greenfield. The latest capex ensures Birla Group remains the biggest producer of cement in India, the report said.

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