UltraTech is now Asia's second-most valuable cement company by m-cap

India’s cement makers continue to race ahead of their global peers in terms of market capitalisation (m-cap) and valuation ratios. The market leader, UltraTech Cement, is now Asia’s second-most valuable cement maker, behind China’s Anhui Conch Cement and ahead of Thailand’s Siam Cement PCL. 

Kolkata-based Shree Cement, on the other hand, is ranked four in Asia in terms of m-cap, ahead of China National Building Material (CNBM) Group Co (CNBM). 

At the end of trading on January 27, UltraTech Cement had an m-cap of $19 billion while Shree Cement was valued at $11.8 billion based on its share price (see the adjoining table). A year ago, UltraTech was ranked No. 3 in Asia, behind Siam Cement, while Shree Cement was at No. 4.  

UltraTech and Shree Cement now together account for a fifth of the combined m-cap of Asia’s leading listed cement makers, against their 6 per cent share in industry’s revenues, according to data by Bloomberg.

Globally, UltraTech Cement is the fourth most-valuable cement maker, behind LafargeHolcim and Ireland's CRH. Shree Cement, on the other hand, is the ninth-largest cement maker in terms of m-cap, behind Thailand’s Siam Cement but is ahead of CNBM Group of China.


In the past year, both UltraTech and Shree Cement have jumped two places in the global m-cap list. 

Anhui Conch tops the list with m-cap of $37 billion, followed by LafargeHolcim at $32.1 billion. CNBM Group Co, however, leads the revenue charts with trailing 12-months revenues of $34.5 billion, followed by Ireland-based CRH with $32 billion in revenues and LafargeHolcim at $27.4 billion.  

Indian cement makers are, however, much smaller in terms of revenues and profits. With latest trailing 12-months (TTM) revenues of $5.2 billion UltraTech is the sixth-largest cement maker in Asia, while Shree Cement is 15th largest on the continent with TTM revenues of $1.8 billion. Analysts attribute this to the much higher stock valuation of Indian cement makers against their global peers. 

“In most industries, leading Indian companies are currently among the most richly valued globally. It is same in cement where UltraTech and Shree Cement have the top preference for institutional investors, pushing their valuations to record highs,” says G Chokkalingam, founder & MD Equinomics Research & Advisory Services.

Others attribute this to a low floating stock in these two counters compared to their peers. “Financial performance alone cannot account for such as large gap in the valuation ratio of UltraTech and Shree with respect to rest of the industry. Promoters’ stake is in excess of 60 per cent in these companies, greatly reducing free float available for trade in the market,” says an analyst on condition of anonymity.

It shows in the price to earnings (P/E) multiple of UltraTech and Shree Cement. Latter is currently the most expensive cement maker globally with P/E multiple of around 81x on trailing 12-months basis, followed by UltraTech at 53x. In comparison, Anhui Conch is trading at 8x its trailing earnings while LafargeHolcim is trading at 14x its trailing earnings. 

UltraTech and Shree Cement are also far ahead of their Indian peers in valuation ratio. For example, LafargeHolcim-owned Ambuja Cement and ACC are trading with P/E multiple of 19.6x and 19.2x, respectively. 

Cement makers in Indonesia are next in valuation ratios after their Indian peers. For example, Indocement Tunggal Parkarsa is trading at 40x its trailing earnings, while its fellow country peer Semen Indonesia Persero is trading at 33x its trailing earnings.

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