UltraTech Cement Limited is an Indian cement company based in Mumbai and a part of Aditya Birla Group. UltraTech is the largest manufacturer of grey cement, ready-mix concrete (RMC), and white cement. It is the only company in the world to have a capacity of over 100 million tonnes or 10 Cr. tonnes in a single country, outside of China. UltraTech cement has a plan of spending more than Rs. 12800 Cr. as capital expenditure in the next 3 years that is until FY25. So, let’s discuss why the company is planning to increase its capacity expansion and want to invest over Rs. 12,800 Cr. in the coming 3-4 years.
Future Plans of Ultratech:
- There will be capacity expansion due to this investment which will be 22 million (2.2 Cr.) tonnes per annum, UltraTech cement is the market leader.
- Ambuja and ACC cement combined have a capacity of 70 Million (7 Cr.) tonnes per annum which is the second-largest cement company whereas UltraTech cement has a total capacity of 120 Million (12 Cr.) tonnes per annum.
- This investment is a kind of challenge taken by the UltraTech cement in response to the stake taken by the Adani group in Ambuja and ACC cement and their current combined capacity is 50 Million (5 Cr.) tonnes per annum less than UltraTech.
- Adani group wants to enhance the capacity of Ambuja and ACC cement from 70 Million (7 Cr.) tonnes per annum to 140 Million (14 Cr.) tons per annum in the next 3 years. They want to double their capacity.
- The major investment will be made by UltraTech will be in brown and green field projects as they wanted to maintain their market leader position.
- The company has projected that by FY23 the UltraTech cement will have the capacity of 137 million (13.7 Cr.) tons per annum and by FY25 this capacity will be at 159 million (15.9 Cr.) tonnes per annum.
- The gap between the Adani and UltraTech cement will go down to almost 1.9 Cr. tons per annum.
- The demand for cement is increasing day by the day.
- UltraTech cement has more than 1,00,000 channel partners all over India, with 22 integrated manufacturing units, 27 grinding units, 8 bulk packaging terminals and, 80% is the market reach of this company. UltraTech Cement is the leader in the cement segment and the company wants to maintain the same.
What should investors do?
The steps taken by the UltraTech cement in competition with the Adani group are practical and realistic whereas the growth forecast of the Adani group is not much practical, we need to watch how things go on in the future. Hence an investor should keep this stock on their radar.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.