India’s cement sector is poised for significant consolidation, as rising domestic demand accelerates mergers and acquisitions (M&A) across the country, according to a fresh analysis by Moody’s Ratings. The report, released on May 27, 2025, highlights that in the last five years alone, India's top 10 cement producers have acquired approximately 140 Million Metric Tonnes Per Annum (MMTPA) of production capacity from smaller, often regional firms. The cumulative value of these acquisitions is estimated to be Rs. 89,000 crore (US$ 10.46 billion), indicating a trend that is expected to intensify further.

Rising Demand & Consolidation Dynamics

According to Moody’s, the Indian cement industry is forecast to grow at a compound annual growth rate (CAGR) of 6-7% until 2030, driven primarily by infrastructure development and an upsurge in residential housing construction. This robust demand backdrop is encouraging the top players to scale up rapidly, often through strategic acquisitions.

Companies with a pan-India footprint, notably UltraTech Cement and Ambuja Cement, are expected to remain at the forefront of sectoral consolidation. These firms are targeting smaller producers that are struggling with suboptimal capacity utilisation and margin pressures, thus providing an opportunity for efficient scaling.

In fact, the top 10 cement companies collectively contribute around 75% of the national cement output, and are expected to lead the next phase of expansion by adding over 200 MMTPA in new capacity by FY28. Out of this, UltraTech and Ambuja alone are projected to account for 30% of new additions, underscoring their aggressive growth plans.

Regional Focus: South India in Spotlight

The Southern region, which includes Telangana, Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh, is currently the largest cement-producing region in India, boasting a combined capacity of over 200 MMTPA. Moody’s suggests that this region is particularly susceptible to consolidation, as it contains numerous mid-sized and smaller players that are increasingly becoming targets for acquisition.

Companies like Shree Cement and Dalmia Bharat are expected to collectively add 50 MMTPA, while other emerging players such as JK Cement and JSW Cement are on track to nearly double their capacities, riding the wave of domestic demand and strategic regional positioning.

Profitability Challenges Amid Expansion

Despite the positive demand scenario, Moody’s cautions about the underlying risks that could impact profitability. One of the major concerns is the volatility in raw material costs, especially limestone and energy inputs like coal and petcoke. Given India’s limited domestic availability, many cement producers remain heavily reliant on imported fuels, exposing them to global price shocks and currency fluctuations.

Moreover, state-level policy decisions, such as the recent Rs. 160 (US$ 1.88) per tonne levy introduced in Tamil Nadu, could materially affect operating margins. According to Moody’s estimates, such levies have the potential to cut profits by 15-20%, especially for companies operating on tighter cost structures.

This combination of rising input costs and regulatory burdens could slow the profitability momentum, even if topline growth remains strong. Therefore, firms that are better vertically integrated, or those that have secured long-term raw material contracts, are likely to fare better.

Outlook Through 2030: Growth With Strategic Realignment

The overall sentiment remains optimistic, with Moody’s projecting that India’s cement consumption will keep pace with the nation’s infrastructure ambitions, including roads, railways, urban metro systems, and housing for all schemes.

This demand scenario ensures that the sector’s total installed capacity, currently around 600 MMTPA, will need to scale up to 800 MMTPA by 2030 to keep up with consumption trends. The expansion will not be uniform; it will heavily depend on geographic demand hotspots, state-specific infrastructure projects, and private housing boom.

Furthermore, technological upgrades—like energy-efficient kilns, alternative fuels, and AI-based logistics management—are expected to become differentiators, offering competitive advantages to early adopters.

Strategic M&A to Continue

The report underscores that M&A activity is not a transient trend but a strategic imperative. As smaller companies struggle with rising costs and limited market access, larger corporations with strong balance sheets will continue to absorb capacity, thereby tightening their grip on regional markets.

For instance, UltraTech’s recent acquisitions in eastern and central India, and Ambuja’s investment in the western corridor, illustrate this very trend. These consolidations help in reducing market fragmentation, improving pricing power, and enabling better capital allocation.

Key Highlights from the Moody’s Report:

• 140 MMTPA capacity acquired by top 10 players in the last 5 years

• Rs. 89,000 crore total investment in these acquisitions

• 200 MMTPA more capacity to be added by FY28

• South India to experience the most M&A activity

• Input cost volatility and state levies present key risk factors

• Sector's installed capacity to reach 800 MMTPA by 2030

Conclusion

The Indian cement industry stands at a transformational juncture, propelled by robust demand forecasts, government-backed infrastructure expansion, and corporate realignment through strategic acquisitions. While volatility in input prices and state-level taxation poses significant challenges, the sector’s long-term growth potential remains strong.

Leading firms such as UltraTech, Ambuja, Shree Cement, and Dalmia Bharat are expected to consolidate their leadership positions, making India not only self-sufficient but also a key exporter in the global cement supply chain.

As the nation moves toward its Viksit Bharat 2047 vision, the cement sector’s role in building the physical backbone of a developed India cannot be overstated. The next five years will be pivotal, both in terms of capacity addition and in shaping industry structure for the coming decades.

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