Cement Industry

Market Size

Rs. 1.35 Lakh Crores in FY12

Annual Growth Rate

10% CAGR from FY07-11

Utilization Rate FY12

Large Plants: 72%

Mini & White Cement Plants: 54%

Industry Median EV/EBITDA

5.7x (ttm)

Industry Median EV/Sales

0.9x (ttm)

Indian Cement Industry 2013

Low utilization rates and weak demand from realty and infrastructure sectors is driving consolidation in the Indian cement industry. More mergers & acquisitions are expected in the medium-to-long-term as valuations are attractive to buyers and investors.

India is the second largest producer of cement in the world with 183 large plants and 365 mini & white cement plants. As per Cement Manufacturers’ Association (CMA), the industry has a total expected turnover of Rs.1.35 lakh crores in FY12 with a CAGR of 10% between FY07-11. Total installed capacity of Large cement plants is 234.3 million tonnes per annum of which 168.3 million tonnes were produced. For Mini & White Cement Plants, the total installed capacity is 11.1 million tonnes per annum of which 6 million tonnes were produced. The industry consists of 42 major players in the country and is expected to consolidate in the medium to long term with many mergers & acquisitions.

Valuation of Cement Companies

Company Name

EV/EBITDA

(ttm)

EV/Sales

(ttm)

UltraTech Cement

12.1x

2.6x

Ambuja Cements

14.9x

3.5x

Grasim Industries

6.1x

1.4x

ACC

13.8x

2.6x

Shree Cement

12.8x

3.7x

Industry Median

5.7x

0.9x

Industry median includes Madras Cements, Century Textiles and Industries, Chettinad Cement Corporation, The India Cements, J.K. Cement, Prism Cement, Birla Corporation, JK Lakshmi Cement, Orient Paper & Industries, Dalmia Bharat Enterprises, Rain Commodities, HeidelbergCement India, OCL India, Kesoram Industries, The KCP, Sagar Cements, Sanghi Industries, Mangalam Cement, Binani Industries, Andhra Cements, Shree Digvijay Cement Company, Visaka Industries, Gujarat Sidhee Cement, Deccan Cements, Saurashtra Cement, NCL Industries, Panyam Cements & Mineral Industries, Shiva Cement, Kakatiya Cement Sugar & Industries, Anjani Portland Cement, Bheema Cements, Burnpur Cement, Barak Valley Cement, Keerthi Industries, Trinetra Cement

Key Mergers & Acquisitions in Cement Industry

Period Target Acquirer
Sep-13 Jaypee Cement (Gujarat) Aditya Birla Group
Aug-13 Sree Jayajothi Cements Cement Roadstone Holdings 
May-13 Lafarge India Pvt. Baring Private Equity Asia
Mar-13 Sree Jayajothi Cements Blackstone Group L.P.
Sep-12 Adhunik Cement Dalmia Cement (Bharat)
Jan-11 Binani Cement Binani Industries
May-10 Avnija Properties Kohlberg Kravis Roberts & Co. L.P.
Nov-09 Samruddhi Cement UltraTech Cement
Oct-09 Samruddhi Cement Grasim Industries
Mar-08 My Home Industries CRH Plc
Dec-07 Shree Digvijay Cement Company Cimpor Inversiones SA
Aug-07 Ambuja Cements Holcim
Aug-07 ACE Refractories Calderys
Jan-06 Uttar Pradesh State Cement Corporation Jaiprakash Associates
Jan-06 Ambuja Cements Holderind Investments
Jan-05 ACC Ambuja Cement India Private
Jun-04 UltraTech Cement Grasim Industries
Apr-00 Raymond Cement Division Lafarge India Holding

End Notes:

Source: Analyst Reports, Company Press Releases, CMA

FY: Financial Year ending March

All multiples are as on Dec 31st 2012

Conversion Rate: 1 USD = 50 INR

CAGR: Compunded Annual Growth Rate

ttm: trailing twelve months, or last twelve months

EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization - a measure of company’s profitability

EV: Enterprise Value - a measure of company’s worth