Aggressive moves from Adani Cement over expanding capacity will be negative for the entire industries, sector analysts have warned.

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The reason for this is that the industry has already been in a multi-year capacity addition cycle, and JPMorgan believes that the Adani group's reiteration of cement capex is a negative for incumbents.

Adani Group's cement companies - ACC and Ambuja Cements are holding roadshows in Singapore and Hong Kong, where Ambuja highlighted various targets for itself over the next five years.

The company plans on increasing its capacity to 140 MT by 2028 from the current 68 MT. It also said that the capex required to fund the doubling of capacity would be worth Rs 46,000 crore, and internal accruals are sufficient for the same.

Ambuja Cements aims to improve its profit per tonne by Rs 300-400 for the next financial year. It plans on doing that courtesy the synergies with the Adani Group. However, analysts are not very convinced about this.

Brokerage firm Morgan Stanley said that there is still uncertainty over the company's medium-term organic and inorganic expansion plans. The firm further noted that there will be more clarity needed around the EBITDA per tonne improvement target for next year.

Also Read: Vinod Adani owns Ambuja Cements and ACC

Even JPMorgan called the assumptions "too optimistic." In an interaction with CNBC-TV18 last week, JPMorgan India's Pinakin Parekh said that this has been an unusual quarter for cement stocks and that the industry is witnessing a one-of-a-kind capacity expansion cycle.

Parekh further said that while there usually is a price hike this time around, new capacity is putting a lid on the same. He also said that the industry has decent profitability and balancesheets are mostly underleveraged.

However, he clarified that this is not a period where regional preference will be a key factor to pick stocks within this space.

Shares of ACC are currently trading 0.4 percent lower, while those of Ambuja Cements are down 0.5 percent. Both stocks have declined 30 percent so far this year.

Also Read: Adani Group fully prepays $2.15 billion share backed financing ahead of deadline

(Edited by : Hormaz Fatakia)