Short call | How M&As are reshaping India's cement sector; IndiGo, Niva Bupa in focus

Short call throws light on eventful market moments

The Indian cement industry is getting a major makeover, with mergers and acquisitions taking center stage as the big players scoop up smaller rivals to boost their market clout. The recent 32 percent stake acquisition of India Cements by Ultratech Cement is just the latest example of how cement giants are consolidating their power, particularly in the still-fragmented Southern region.

Earlier, even Adani Group’s Ambuja Cement had snapped up Penna Cement to cement its presence in this lucrative but underdeveloped market.

So, why all the fuss over the South? It’s all about the soaring demand for urban infrastructure in Tamil Nadu, Karnataka, Telangana, and Andhra Pradesh. These deals aren’t just about local dominance—they also open doors to the Sri Lankan market, adding an international twist.

However, it’s not all smooth sailing in the cement world. While most cement players struggled during the July-September quarter due to sluggish sales, Ultratech and Ambuja Cement managed to stand out, thanks to their strategic acquisitions. In fact, cement prices fell by about 10 percent year-on-year in the first half of FY25 (from Rs 360 per bag to Rs 330 per bag), which didn’t help the bottom line.

Looking ahead, the picture is a bit cloudy. The ongoing wedding season, unpredictable weather, pollution restrictions, and delays in government-funded infrastructure projects could throw a wrench in demand. But analysts are still hopeful, expecting cement demand to bounce back in the second half of FY25.

With the government pushing big-time on infrastructure, a healthy monsoon helping rural economies, and steady urban housing demand, the industry is ready to rise from the ashes—ready to pour on the growth.

InterGlobe Aviation (Rs 4,440, +2.06%)

Elara Capital upgraded counter to 'buy' from 'sell' rating.

Bull Case: The brokerage cited expectations of strong demand growth through FY28, driven by capacity expansion at major airports, launches of new airports, and the return of the P&W aircraft to IndiGo's fleet as key factors behind its upgrade.

Bear Case: Elara Capital noted that some key risks to its call would be a jump in crude oil prices to above $90/bbl and delay in return in operations of AOG fleet.

Niva Bupa (Rs 76.63, +1%)

Morgan Stanely initiated coverage with ‘equal-weight’ rating, anticipating 15% upside

Bull Case: Touted by Morgan Stanley as ‘a good franchise to play a secular opportunity.’ Turned profitable in Q2, with growth momentum likely to continue with mid-teen RoE despite intense competition.

Bear Case: Post listing, the stock has already witnessed a rollercoaster ride, surging upto 40% before paring all gains to profit booking. Lock-in expiry for pre-IPO investors may put more pressure on stock performance in near term.

(with inputs from Zoya and Vaibhavi)