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title: Best Cement Stocks

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# Best Cement Stocks
# (https://topcementcompanies.com/top-10-cement-companies-in-usa/)

The Indian cement industry is the world’s second-largest producer after China and is the third-largest consumer. Housing & Real estate consists of 65% share of cement demand followed by Public infrastructure, Industrial Development which is 25% and 10% respectively. Cement industry is currently going through a structural change as COVID-19 forced many companies to manage their costs effectively.

Strong pricing levels across regions and low operating costs helped cement companies in not only overcoming the crisis but also getting back to growth in FY21. In terms of management commentaries many top cement companies have reinstated their CAPEX plans, which were put on hold due to the pandemic, and this shows that the confidence among large cement players is coming back and tough times are largely over.

Over the medium-term cement companies are facing huge cost-related headwinds as most of the cement companies have reported increase in raw material, power and fuel costs backed by soaring energy and logistic costs will pose a challenge in maintaining elevated realisations and profits. Cooling of the commodity prices can cool down the prices and upscale the demand for cement.

> Also Read: [China Cement](https://topcementcompanies.com/top-10-cement-companies-in-china/)

How to Identify a Good Cement Company?
Cement industry is a highly capital-intensive industry. A green field project for 1 MT requires capital expenditure to the tune of Rs.3 bn (2 MT is an ideal size for a company to have some kind of economies of scale).

This sector operates with a high level of fixed cost (maintenance cost is around US$ 5 per tonne annually) and therefore volume growth is critical. Access to raw materials (limestone and coal) and consumer markets are equally important in the long term. Therefore, any material change in raw material prices or contracts with suppliers can hamper production to a huge extent.

The Indian cement industry has to be viewed on a regional basis viz, North/South/West/East. Demand may be favourable/unfavourable in some areas. It is also highly fragmented with top six companies already accounting for 60% of industry capacity, the rest 40% is distributed among 40 small players.

So conservative investors should pick top companies atleast since the current scenario is challenging.
Cost factor plays a huge role in cement companies as more the savings in cost more will be their margins.

So, a company which can control its freight, power and other fixed costs can score against its peers as the competition level is also very high amongst players in this sector.

Since cement is a regional play on account of its high freight costs, the company should not have all its plants concentrated in one region. It should have a geographical spread so that adverse market conditions in one region can be mitigated by high growth in the other region.

Important ratios to look for are EBITDA per tonne, Net Debt/EBITDA, Top & Bottom line growth, ROE & ROCE etc. Also, capacity utilization levels are equally important to look at while analysing a cement company as it shows how efficiently the company is utilising its capacities.

> Also Read: [Best Cement in India](https://topcementcompanies.com/cement-companies-in-india/)

Cement Stocks in India – Portfolio Companies
Shree Cements
Shree Cements which started operations at its first greenfield cement plant in Beawar, Rajasthan, in 1979, is the second largest cement group in India with operational capacity of 46.4 million tonnes per annum (mtpa) as on March 31, 2022. From 100% of its capacity being in northern India until 2014, the company has diversified across Rajasthan, Uttarakhand, Bihar, Chhattisgarh, Haryana, Uttar Pradesh, Karnataka, Jharkhand, Odisha and Maharashtra. Its cement production has grown at a CAGR of 13.14% from 13.5 mtpa in 2011-12 to 46.4 mtpa in 2021-22. Moreover, its capacity has grown from 210 MegaWatt (MW) in 2011-12 to 771 MW.

Ambuja Cements
Initially called Gujarat Ambuja Cements Ltd, Ambuja Cements Ltd is one of the major Indian cement producing companies. Ambuja Cements was a part of global conglomerate Lafarge Holcim which acquired over 50% stake in the company. In 2022, Ambuja Cement also became a member of the Adani group.

 

Ambuja has a total capacity of 30 MTPA and has 6 integrated cement manufacturing plants with 8 cement grinding units across the country. Ambuja was the first Indian cement manufacturer to build a captive port with three terminals along the country’s western coastline and it enjoys a reputation of being one of the most efficient cement manufacturers in the world. The company also has its own fleet of ships for effective transportation of cement.

## > Also Read: [Alpha Portland Cement Factory](https://topcementcompanies.com/top-cement-companies-in-south-africa/)