Capacity war begins in cement space with UltraTech announcing expansion planULTRACEMCO - 9034 Change: 30.20 (0.34 %)
News: UltraTech has announced Rs 12,886 crore expansion plan towards 22.6 MT capacity expansion organically across the country.
Views: The new capacities are being added at EV/tonne of $76/tonne (ie. at 43% discount to the current replacement cost). While this is a key positive, the move towards reinforcing the company’s position as No. 1 cement player in India in the wake of entry of new aggressive player may lead to industry supply outpacing the demand growth over the next three to four years. This may lower the pricing power of players, in our view.