Letter # 102 | 18 Oct 2022
Drop prices by 40%, reduce the number of players from ten to three and emerge stronger on the other side of the predatory pricing war. Reliance Jio did over the past decade; can we expect Ultratech to follow, and do the same for the cement sector? Capacity is 550mt, demand is only 350mt. In the past decade, everybody other than Holcim grew capacities. Now, everybody (incl. erstwhile Holcim) wants to grow. Meanwhile, sector ROE is lower than the cost of capital. In today’s ET article, we evaluate how Jio did it, and why replicating the same for the cement sector is difficult. Read here: https://tinyurl.com/38nxtn84
Read the previous 101 articles here: https://www.buoyantcap.com/memos/
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