Whalesbook
The Indian cement sector is undergoing a substantial expansion phase, with demand projected to grow 6-7% in the near term, fueled by sustained infrastructure spending and steady housing activity. To meet this, the industry plans to add 85-90 million tonnes per annum of capacity over the next two years. This expansion is a mix of brownfield projects and new grinding units, involving both established players and regional firms.
Valuations Tell a Divergent Story
While capacity additions are widespread, the market's valuation of these companies varies significantly. Giants like UltraTech Cement, with their scale and execution track record, already trade at multiples that factor in smooth capacity additions and stable margins. UltraTech, for instance, reported a solid December 2025 quarter with volumes up 15% and profit climbing 32%. However, its stock trades around 24.7 times EV/EBITDA, largely in line with its three-year median, indicating that current growth is already priced in.
The 'Dark Horses'
In contrast, some companies, despite clear expansion blueprints and manageable balance sheets, trade closer to historical valuation levels. The market is adopting a selective approach, waiting for these firms to translate expansion into tangible earnings and utilization gains. This gap between expansion visibility and stock price reflection highlights potential entry points.
ACC Limited, a part of the Adani Group, offers a compelling case. It reported a strong September 2025 quarter with volumes up 20% and net profit soaring 177%. ACC is targeting 155 MTPA capacity by FY28. Yet, it trades at a striking 6.7 times EV/EBITDA, significantly below its three-year median of 12.2 times. This low valuation, despite strong operational performance and revised capacity targets, suggests the market is yet to fully price in its integration benefits and growth trajectory.
Similarly, Nuvoco Vistas Corporation, a prominent cement and concrete manufacturer, posted its highest-ever third-quarter volumes and achieved a turnaround in net profit for the December 2025 quarter. With planned capacity expansions to reach approximately 35 million tonnes per annum, Nuvoco Vistas trades at 9.8 times EV/EBITDA, below its three-year median of 12 times. Its ROCE stands at a modest 3.9%, indicating that investors are awaiting sustained earnings improvement and a stronger balance sheet to justify its expansion cycle.
JK Cement also shows visible expansion, with new units commissioned and planned greenfield projects. While its EV/EBITDA of 18.1 times is near its three-year median of 19.2 times, its ROCE of 14% is robust. The market appears to be cautiously valuing its growth, emphasizing execution discipline and financial control as capital expenditure rises.