Mumbai: The fierce expansion race between India’s two largest cement makers, which led to industry-wide overcapacity and margin erosion, may finally be cooling, with the Adani Group hinting it will prioritize profitability once its existing plans are completed.
, which was acquired by the Ahmedabad-based conglomerate in September 2022, told analysts at a plant visit last week that it at the expense of margins. The company was open to pushing back its FY28-end target of achieving 155 million tonnes per annum (mtpa) capacity by a couple of years as it looks to increase the utilization of its existing capacity. Currently, it is the second-largest cement maker in India with 109 mtpa of capacity.
The rivalry between the Adani Group and the Aditya Birla Group’s UltraTech Cement Ltd has resulted in rapid manufacturing capacity expansion. In the last three-and-a-half years, the two conglomerates have added nearly 120 mtpa of cement manufacturing capacity between them, about a third of which was through organic expansion and the rest through the acquisition of half a dozen smaller players. For context, the capacity they added is more than the total capacity of the next two players combined.
UltraTech Cement has 189 mtpa domestic capacity at present, and 194 mtpa total including international operations.
The expansion spree of the top two players prompted other companies also to increase their manufacturing footprint or risk being completely priced out by the efficiencies of scale that the two behemoths were building.
While India’s cement demand has also grown over this period, the rapid expansion meant that plant utilization rates remained sub-optimal. Meanwhile, competition for market share further drove down prices, benefitting cement user industries but crimping the margins of cement manufacturers.
India’s cement capacity went up from about 568 mtpa at the end of FY22 to 668 mtpa at the end of FY25, as per Crisil. Demand during this period grew from 356 mtpa to 467 mtpa. The capacity is expected to surpass 725 mtpa by the end of FY26 with consumption of about 480 million tonnes (mt).
“The management noted that while it has a blueprint ready to achieve cement capacity of 155 (mtpa), it will not rush into expansions at the expense of margins,” analysts at HDFC Securities wrote in their 10 March note. The company will focus more on increasing the sale of its premium cement and cutting costs, they said. It will also focus on the capacity debottlenecking, and hence it has no issues in pushing its 155 mtpa target by end-FY28 by one or two years, they said.
“This stance, in our view, is a positive development as this should reduce both margin and balance sheet stress for Ambuja,” the HDFC Securities analysts noted.
Analysts at brokerage Motilal Oswal came with similar observations from their interaction with the cement maker’s top management.
“Going forward, the focus will be on improving utilization to ~80% and subsequently ~85% to enhance RoI (return on investment), after which the next phase of expansion will be evaluated. If the current capacity base delivers the targeted volumes and market share, the company may adopt a more measured pace of further additions,” the analysts noted on 9 March.
A spokesperson for Adani’s cement business said that there was no change in priority for the company, but rather an emphasis of the group’s approach to growth in the cement business being anchored around long-term value-creation with operational excellence and disciplined capital allocation.
“Cost optimization has been core to the strategy and one of the key factors is to optimize utilization of existing assets. The Indian cement market continues to offer significant long-term potential, supported by infrastructure development, housing demand, and economic growth. The Group remains committed to participating in this opportunity in a calibrated manner-balancing expansion with profitability, sustainability, and stakeholder value,” the spokesperson said.
UltraTech Cement did not respond to Mint’s queries on whether it will also moderate its rate of expansion to prioritize profitability.
The capacity expansion race between the two cement makers was hot until as recently as late 2025. In August, Aditya Birla Group chairperson Kumar Mangalam Birla said that target by March 2026, a year ahead of its earlier guidance. In November, Ambuja cements upped its end-FY28 target to 155 mtpa from 140 mtpa.
The market has also priced in this competition. Crisil analysts projected in November that India would add 160-170 mt of fresh capacity from FY26 to FY28 compared to the 95-100 mtpa added in the preceding three-year window.