UltraTech Cement, a leading cement producer in India, has announced plans to acquire a 23% stake in its competitor, India Cements Ltd. This strategic move involves purchasing approximately 70.6 million shares of India Cements at a price of up to Rs 267 per share, amounting to a total investment of Rs 1,885 crore.
The acquisition is set to be completed within a month, as per regulatory filings. This acquisition marks UltraTech’s latest expansion effort in the highly competitive cement industry, where it aims to bolster its market position.
Currently, UltraTech boasts a production capacity of 152.7 million tonnes per annum (MTPA) of grey cement, significantly ahead of Adani Group’s Ambuja Cement, which stands at 77.4 MTPA. UltraTech has set ambitious goals to increase its capacity to 200 MTPA by FY27.
India Cements, headquartered in Chennai, has faced financial challenges, including high operating costs and a net loss of Rs 215.76 crore for the fiscal year ending March 2024. The company’s revenue was reported at Rs 5,112 crore during the same period. This acquisition could potentially help India Cements improve its financial performance and operational efficiency.
The cement industry in India has seen considerable consolidation, particularly since the entry of the Adani Group. Recently, Adani’s Ambuja Cement acquired Hyderabad-based Penna Cement for Rs 10,422 crore. This ongoing consolidation aims to enhance efficiency and expand market share in the growing infrastructure sector driven by government initiatives.
Shares of India Cements surged by 11.5% following the announcement, reflecting positive market sentiment towards the deal. Industry analysts speculate that UltraTech might eventually aim for a majority stake in India Cements, further solidifying its market dominance.
