UltraTech Cements buys majority stake in India Cements, both stocks trade in green; check key details

Cement major stocks UltraTech Cement and India Cements are under focus on Monday after the country’s largest manufacturer of grey cement announced the acquisition of an almost one-third stake in India Cements over the weekend.

Shares of India Cements hit a new 52-week high of ₹385 per piece on the National Stock Exchange (NSE), rising 3% in early trade on July 29, 2024. Similarly, UltraTech Cement's shares opened the new week in green, gaining 1.4% so far in the morning session.

The Board of Directors of the Aditya Birla Group company held a meeting on Sunday to consider and approve a proposal to acquire an additional 32.72% stake in India Cements from the latter’s promoters and members of the promoter group.

The cement giant’s Board gave the green light to acquire more than 10 crore equity shares of India Cements, representing nearly a 33% stake, at a price of ₹390 per piece, amounting to a total deal of ₹3,954 crore.

On the completion of the said deal, UltraTech Cement’s total stake in the Chennai-headquartered company will rise to 55.49%. Last month, the former had bought a nearly 23% stake in India Cements.

The main investment rationale behind a one-third acquisition in the N Srinivasan-owned India Cements is to expand UltraTech Cement’s presence and footprint in the ‘highly fragmented, competitive and fast-growing’ South-Indian market, majorly in Tamil Nadu, where the company has a limited presence. It is an added benefit that India Cements is also primarily grounded in the business of grey cement and ready-mix concrete.

The country’s largest cement producer has informed the stock exchanges that the operational efficiencies gained from acquiring ready-to-use assets will reduce the company’s time to market for greenfield projects and allow it to evaluate the optimisation of its existing capacity expansion plans in the southern market in India.

UltraTech noted that the acquisition of an additional stake in India Cements will enhance value for the shareholders and create direct and indirect employment opportunities.

Further, UltraTech Cement’s Board has given the nod to an open offer for up to 8.05 crore equity shares of India Cements, making up 26% of its share capital at ₹390 apiece, from the company’s public shareholders.

UltraTech Cement shares are trading 0.7% higher at ₹11,755 apiece on the NSE at 10:30 am, while India Cements shares are up 0.9% at ₹377.4 per share.