Cement sector giant UltraTech Cement Ltd has announced the purchase of 8.69 percent stake in Star Cement Ltd in a deal worth Rs 851 crore. In this deal, about 3.7 crore equity shares were purchased at the rate of Rs 235 per share. This transaction is exclusive of taxes and other charges.
Decision to sell promoters’ stake
Star Cement’s promoters and promoter group entities proposed to sell their stake, which was accepted by UltraTech. On December 27, the board of UltraTech Cement approved the deal. The transaction is being seen as a strategic investment for UltraTech in the form of a non-controlling minority stake in the company.
Transaction of 3.36 crore shares in block deal window
Additionally, 3.36 crore shares of Star Cement were transacted for Rs 766 crore through the block deal window. As a result, Star Cement shares rose by more than 7% to Rs 247.30 per share at 9:20 am on December 27.
Approval for acquisition of ICL received on December 20
Earlier this month, on December 20, the Competition Commission of India (CCI) had approved the acquisition of India Cements Limited by UltraTech Cement.
Acquisition of 32.72% stake in July
Earlier, in July 2023, UltraTech had announced to buy 32.72% stake from the promoters of India Cements in a deal worth Rs 3,954 crore to strengthen its hold in the fast-growing cement market of Tamil Nadu and South India.
Along with this, UltraTech had also announced an open offer of Rs 3,142.35 crore for 26% stake in ICL.
Increasing Competition and Consolidation in the Indian Cement Industry
The Indian cement industry is currently undergoing consolidation and competition between two major corporate houses. Small players are gradually being acquired by larger conglomerates.
Experts believe that the cement industry will see a boom in sales, higher profit margins, and demand from 2025 onwards. Additionally, increased spending on infrastructure by the government will further boost the demand for cement. According to estimates, with the help of the government, cement sales can increase by 8%.
UltraTech Cement: CLSA’s first choice
According to experts, UltraTech Cement is the most reliable stock in the cement industry. Foreign brokerage CLSA has predicted that there will be a significant surge in cement demand during the second half of financial year 2025 (2HFY25) and FY26. According to CLSA, there was a recovery in sales in November, which had been weak in October.
Stock Display: 27 December 2023
- UltraTech Cement: Fell 0.47% or Rs 54.10 to close at Rs 11,406.55 at market close on December 27.
- Star Cement: On the same day, the stock of Star Cement closed at Rs 232.18 with a gain of 0.95% or Rs 2.18.
