The airports-to-energy conglomerate Adani Enterprises is now moving into the cement business. The Gautam Adani-led flagship company of the Adani Group, in an exchange filing, said that it incorporated a wholly-owned subsidiary —Adani Cement, with an authorised share capital of Rs 10 lakh and paid-up capital of Rs 5 lakh.
“The Company has incorporated a wholly-owned subsidiary namely, Adani Cement Industries Limited (ACIL) on June 11, 2021. The company has no turnover and is yet to commence its business operations,” Adani Enterprises said in a BSE exchange filing.
The company which will be headquartered in Gujarat will “carry on business as manufacturers, producers, processors of all types of cements”.
The sector which is likely to do well ahead is dominated by incumbents such as UltraTech Cements, ACC, Shree Cements, Ambuja Cements, JK Cement, Jaiprakash Associates, JK Lakshmi Cements in the listed space.
Analysts see concrete gains for the sector given India’s huge planned infrastructure push and a potential shift in pricing power to producers in near future.
In an interview with ET Now earlier, Ridham Desai, MD, Morgan Stanley, said he preferred cement stocks over metals as space has not seen capacity addition in the last few years. He expects pricing power to be transferred to producers once the volume breakout in the next two years.
Global brokerage and research firm Credit Suisse is also bullish on the sector. In a note co-authored by Neelkanth Mishra, Abhay Khaitan, and Prateek Singh, Credit Suisse said that normalisation of input costs going ahead will benefit sectors such as paints and cements with increased pricing power.
“An extreme supply-chain bull-whip is likely driving chemicals too: inputs to adhesives, paints, cement, etc. As costs fall, firms with pricing power should benefit,” the report said.
The research firm noted that owing to supply chain bottlenecks, raw materials in sectors such as paints, adhesives and cements are priced at “unseasonably high levels”.
“As petrochemical price trends normalise and costs fall, firms with pricing power should benefit,” it added.
Credit Suisse has added Asian Paints and UltraTech Cements to its portfolio to benefit from the trend
