Cement Industry Insights from Ikigai Report

CementIndustry Current Scenario - From Ikigai Cement Sector Outlook

1) Cement is one of the Cheapest Commodities

Cement= 5-7 INR/ kg

Sugar= 38-40 INR/ kg

Steel = 50 INR/kg

Tomato = 40-50 INR/Kg

2) Supply Additions > Demand Growth

Capacity Utilization from 85% in 2007 to 66% now.

3) Consolidation

Top 5 players = 50% of Market Share

4) Cement Prices have only increased at a rate of 3% Cagr in 15 years and 1% Cagr in last 10 years.

5) EBIDTA per tonne in a band of 800 to 1200 since 2007 .

6) FDs yield a better Return to a New Cement Plant

7) Profitability needs to double from current levels to justify investments 8) Low Single Digit ROCEs for the Industry

The Future could be much better with

1) Consumption growth

2) More Consolidation

3) Cost Reduction by Renewable Power

4) Commentary indicates prices have bottomed

5) Strong Balance Sheet & Cash Flows

If EBITDA/t improves, earnings CAGR can be much higher than index