UltraTech Cement on Thursday announced that the company board has approved the acquisition of approximately 23 per cent equity stake in India Cements. In a regulatory filing, the company stated that it intends to acquire 7.06 crore shares of India Cements at Rs 267 per share. This takes the total cost of acquisition to Rs 1885 crore.
“The Board of Directors of the Company at its meeting held today approved making a financial investment to purchase upto 7.06 crores equity shares of The India Cements Limited, a company incorporated under the Indian Companies Act, 1913, having its registered office at Dhun Building, 827, Anna Salai, Chennai 600 002, (ICL) at a price of upto Rs 267 per share,” it said in the exchange filing. The acquisition, it added, will be completed in one month.
India Cements is a cement manufacturing company based in Chennai. It had recorded a turnover of Rs 5112 crore in FY24, Rs 5608 crore in FY23, and Rs 4858 crore in FY22. It is the largest cement player in the country with an overall capacity of 152.7 MTPA. Earlier this year, it had acquired the cement business of Kesoram at an enterprise value of Rs 7,600 crore.
Earlier in April, UltraTech Cement had announced that it has earmarked Rs 32,400 crore as capex for the next three years for expansion of its production capacity, which will include completing its acquisition of Kesoram Cement. The Aditya Birla Group’s cement flagship firm intends to expand the capacity of grey cement to 198.2 million tonne per annum (MTPA).
Reacting on this, Tushar Chaudhari, Research Analyst, Prabhudas Lilladher, said, “We believe consolidation is expected to continue in the cement space with industry leaders having strong balance sheets; competition is also expected to increase with players trying to gain market share. Near term demand remains muted and expected to improve post monsoon. Pricing is also expected to improve once demand recovers substantially from 2HFY25E. We remain positive on industry leaders as we expect both UltraTech Cement and India Cements would keep gaining market share with things are going to get difficult for inefficient smaller players.”
