Two of India’s richest men are locked in a battle for cement supremacy as they snap up rivals to corner a soaring market fueled by a homegrown infrastructure boom.

The latest chapter in what is being dubbed as a clash of the titans saw billionaire Kumar Mangalam Birla’s market-leading Ultra Tech pay $697 million since June for a 56% stake in India Cements, which traces its beginnings to 1946, when India was still a British colony. That followed a $641 million buyout of Kesoram Industries’ cement business in November.

Birla’s acquisition spree ended a six-year hiatus — UltraTech last acquired a rival in 2018 — and came on the heels of an incursion by rival Gautam Adani, whose businesses span ports, power, airports and real estate.

Adani, also a billionaire and household name in India, marked his foray into cement in 2022, when he outbid Birla and infrastructure conglomerate JSW group to buy Swiss multinational Holcim’s cement business in India. The $10.5 billion deal transformed Adani Group into the country’s second-largest cement manufacturer overnight with capacity of about 70 million metric tons annually (mtpa).

“What changed in the industry was Adani Group’s entry,” said Manish Valecha, a research analyst at Anand Rathi Securities. “Adani made it clear that they want to grow in this business and grow rapidly, and that would also mean challenging the position of UltraTech, which is the leader.”

With an eye to expanding capacity to 140 million tonnes per year by 2028, Adani has since spent another $1.6 billion to buy Sanghi Cements, Penna Cements and My Home Group’s cement grinding unit, which will bring in an additional 21 mtpa. By comparison, UltraTech’s capacity stood at 152.7 mtpa in March, with a goal to top 200 million tonnes in three years.

Adani hopes his group’s cement business will draw from the broader conglomerate to keep costs low. Cement is a commodity; it offers little opportunity for producers to differentiate themselves from competitors apart from price, analysts said.

“Power, fuel and freight are the big costs for cement companies,” said Satyadeep Jain, director of equity research at investment advisory firm Ambit. “The Adani group appears to be counting on its integrated infrastructure setup to optimize costs.”

The battle between established and the upstart cement makers underscores the urgency among homegrown businesses to take advantage of the rapid infrastructure development, from roads and houses to green energy, championed by the Narendra Modi-led government. New Delhi is betting that world-class infrastructure will transform India into a lucrative destination for investors who are shying away from China — and transform it into a $5 trillion economy.

The government’s capital expenditures reached 7.4 trillion rupees ($88 billion) in fiscal 2023, with its budgeted allocation this year jumping 50% to 11.11 trillion rupees. India’s fiscal year ends in March.

Birla and Adani’s companies both have some big-ticket projects in their portfolio. UltraTech poured cement for India’s new parliament building and the world’s biggest cricket stadium — a 132,000-seat behemoth named after Modi.

Adani’s group supplied cement for a nearly 22-kilometer long road bridge in the commercial capital Mumbai, and for India’s longest highway tunnel in mountainous Kashmir.

Total cement sales in India, the world’s No. 2 market where almost all of the material is sold domestically, will likely top 460 mtpa in the year ending next March, up 38% from fiscal 2020, “driven by sustained healthy demand from the infrastructure and housing sectors,” said local rating agency Icra.

Only China outdoes India in the global cement business with an eye-watering 2.1 trillion tonnes produced last year, according to the U.S. Geological Survey.

“The (Indian) businesses are eyeing the infra[structure] opportunity. Building assets on their own is going to take time, versus buying, where one gets capacity right away,” said Ambit’s Jain. “There is obviously a bidding competition going on because … [Birla and Adani] are both aiming for the numero uno position.”

The quest for the top spot could trigger a string of buyouts, where both Adani and Birla shell out top dollar to convince smaller rivals to sell. UltraTech, which is now in talks to buy Orient Cements, paid $110 per tonne of capacity for India Cements, Ambit estimated.. That is well above a $80 per tonne average cost of buyouts over the past nine years, according to Icra.

“About 40 mtpa to 50 mtpa of capacity is likely to get acquired in the next six to eight months or so,” said Anand Rathi’s Valecha.

The market share of India’s top five cement manufacturers is on track to hit 55% in fiscal 2025, up from 45% in 2015, Icra said.

But analysts cautioned that the battle among strong competitors like Birla and Adani may force price cuts. That could hurt smaller cement manufacturers and, in turn, create more buyout opportunities.

Such was the case in India’s telecom industry with the entry of Reliance Industries’ Jio, which wooed consumers with cheap data, leaving rivals bleeding. From about 10 telecom operators a decade ago, India now has only three. Jio is the biggest in terms of subscribers.

Muted demand and pricing pressure hit profits at India’s top cement producers in the April-June quarter. UltraTech and Dalmia Cement’s earnings were flat at 16.95 billion rupees and 1.45 billion rupees, respectively. Shree Cement’s profits fell 45.32% to 3.17 billion rupees. Adani group’s Ambuja Cements saw its bottom line slump 30% to 7.89 billion rupees.

“Cement prices took a beating in the second half of the fiscal year amid increasing competition and higher supply in the market,” research firm Crisil said in an April report.

As a result, cement prices in the 2024 fiscal year moved between 383 rupees and 385 rupees for a 50-kilogram bag, down from 391 rupees a year earlier, with prices expected to stay largely flat in the short term, it added.

“Price cuts will depend on how far this fight for market share goes,” said Jain at Ambit. “Some marginal players have already started bleeding at these [price] levels.”