Large-cap cement sector stocks like Ultratech Cements and Ambuja Cements are primarily involved in the production and sale of cement and related products worldwide. Who is the Market Leader in Cement Sector?
India is the second-largest cement producer in the world, contributing more than 8% of the global capacity. In 2023, India’s cement market size was 3.96 billion tons and projected to grow to 5.99 billion tons by 2032, with a CAGR of 4.7% from 2024 to 2032. Cement consumption is expected to reach 450.78 million tons by the end of FY27.
1. Ultratech Cements Ltd
- Market Cap: ₹2.98 Lakh Crore
- Current Price: ₹10,341 per share
- Returns: 54% in 3 years, 136% in 5 years
Ultratech Cements reported a 2.7% increase in revenue from ₹16,739.97 Crore in Q3FY24 to ₹17,193.33 Crore in Q3FY25. However, net profits decreased by 17% from ₹1,774.78 Crore to ₹1,473.51 Crore. Despite muted Q3 numbers, it beat the street’s estimates.
The company achieved 73% capacity utilization, a 10% YoY growth in domestic sales volume, and a 13% YoY reduction in energy costs. With the acquisition of India Cements, its cement capacity reached 171.11 MTPA, aiming to exceed 200 MTPA by FY27.
Global brokerage Morgan Stanley rated UltraTech Cement as ‘overweight’ due to its strong capacity expansion, cost efficiency, and market leadership, setting a 12-month target price of ₹13,650 for Ultratech Cements Ltd.
- Pros
- Company has been maintaining a healthy dividend payout of 21.8%
- Cons
- Stock is trading at 4.86 times its book value
- Company has a low return on equity of 12.2% over last 3 years.
2. Ambuja Cements Ltd
- Market Cap: ₹1.16 Lakh Crore
- Current Price: ₹472 per share
- Returns: 52% in 3 years, 124% in 5 years
Ambuja Cements shown a 4.5% increase in revenue from ₹8,052 Crore in Q3FY24 to ₹8,415 Crore in Q3FY25. Net profits surged by 140% from ₹1,091 Crore to ₹2,621 Crore, including ₹913 Crore in government grants.
The company has a capacity of 97 MTPA, with 22 MTPA added in the last 24 months. Ongoing projects are expected to boost capacity to 104 MTPA by the end of the current fiscal year, 118 MTPA by FY26, and 140 MTPA by FY28. Capex and Opex initiatives aim to further reduce costs by 15% by FY28.
Morgan Stanley expects continued demand growth in the cement sector, driving sustained price increases. They set a 12-month target price of ₹590 for Ambuja Cements.
- Pros
- Company is almost debt free.
- Company has been maintaining a healthy dividend payout of 25.5%
- Cons
- The company has delivered a poor sales growth of 4.95% over past five years.
- Company has a low return on equity of 10.1% over last 3 years.
- Earnings include an other income of Rs.2,382 Cr.
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Ultratech Vs Ambuja Comparison
| Metric | Ultratech Cements Ltd | Ambuja Cements Ltd |
| Market Cap | ₹2.98 Lakh Crore | ₹1.16 Lakh Crore |
| Current Price | ₹10,341 per share | ₹472 per share |
| Year Range | ₹ 12,145 / 9,250 | ₹ 707 / 453 |
| P/E Ratio | 48.31 | 27.5 |
| Dividend Yield | 0.63% | 0.43% |
| Revenue (Q3FY25) | ₹17,193 Crore | ₹8,415 Crore |
| Net Profit (Q3FY25) | ₹1,473 Crore | ₹2,621 Crore |
| Capacity Utilization | 73% | 70% |
| Total Capacity | 171.11 MTPA | 97 MTPA |
| ROE | 12.2 % | 9.24% |
| ROCE | 15.1 % | 12.8% |
Conclusion
Cement manufacturers believe that increased spending on large-scale housing and infrastructure projects announced in Budget 2025 by Finance Minister Nirmala Sitharaman will boost demand for construction materials and enable capacity expansion.
Also Read: Why did Cable Stocks Crash by Up to 20%?
The Cement Manufacturers’ Association sees the Budget as a strong vision for India’s development through strategic investments in people, the economy, and innovation.