(Bloomberg) -- Battle lines are being drawn in India’s cement space as Gautam Adani’s expansion spree sets off a race with fellow billionaire Kumar Mangalam ...
-- Battle lines are being drawn in India ’s cement space as Gautam Adani ’s expansion spree sets off a race with fellow billionaire Kumar Mangalam Birla ’s UltraTech Cement Ltd. to build capacity and snap up assets.The clash of titans is likely to intensify as the deep-pocketed tycoons seek to dominate supplies of a building material that is critical to sustaining India ’s infrastructure boom.
The Adani Group, which controls India’s largest private sector port operator, is aiming to drive down costs significantly even if it can’t match the cost efficiency of Chinese cement makers, one person said. Prime Minister Narendra Modi’s mission to build everything from airport and power facilities to roads, bridges and tunnels will spur India’s infrastructure investment to 15 trillion rupees by March 2026, according to Crisil Ratings.
The southern parts of India is the most fragmented market for cement in the country, with the highest installed capacity and a large number of firms which have not expanded capacity over the years, Sanjeev Kumar Singh and Mudit Agarwal, analysts at Motilal Oswal Financial Services Ltd. wrote in a July report.
UltraTech’s shares advanced as much as 1.4% during trading in Monday while India Cements surged 3.1%, outpacing the 0.6% rise in the benchmark S&P BSE Sensex. To be sure, even with all the aggressive expansion it’d still be hard for Adani to topple UltraTech. The gap between the two rivals is significant and will remain so, based on announced capacity additions.Adani and UltraTech will also need to be mindful of scrutiny from India’s anti-trust watchdog and avoid acquisitions in geographies where they have high market share concentration.
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