UltraTech Cement said on Thursday, 27 June that the company has decided to acquire about 23 percent equity stake in India Cements, of which it has already bought 19.44 percent in the morning block deals. UltraTech board has approved buying another 3.4 percent equity in India Cements to complete the targeted acquisition.
On 27 June, UltraTech bought 6.02 crore shares in India Cements at Rs 267 per share. The Aditya Birla group company will buy the remaining 1.04 crore shares that it wants at up to Rs 285 per share. That would take the total acquisition cost just above Rs 1,900 crore.
India Cements stock jumped to an intraday high and a new 52-week high of Rs 298.8, and was trading up 11.11 percent at Rs 292 in the morning trade. It extended the previous session's 14 percent gains. The development was first reported by CNBC-TV18 earlier in the day.
On the other hand, UltraTech Cement share price jumped 5 percent to Rs 11,700 on the National Stock Exchange.
The promoter group owns 28.42 percent stake in India Cements, whereas famed investor Radhakishan Damani and associates own 20.78 percent shareholding in the cement firm.
UltraTech said that the indicative time period for completion of the acquisition is one month. The acquisition is being done for cash, it added.
Cement stocks are on a rise of late. Emkay Global said in a recent note said that cement stocks under its coverage have rallied 6-20 percent in the last one month, mainly on the back of a stable government and hopes of sustained push on infrastructure development.
Structurally, the cement industry has been on an upward trajectory, achieving a healthy volume CAGR of 9-10% from FY21 to FY24, compared to its historical average of 5-6%. While demand may soften in the first half of this fiscal year, Emkay anticipates a steady demand CAGR of 7-8% over the next few years.
Goldman Sachs' Asia Pacific equity strategist Sunil Koul said in an interaction with CNBC TV18 that the brokerage firms is positive on the cement sector overall, and likes the sector from a medium-term as well.
The firm is constructive on cement space, as it says that the broader building material space is attractive. Also, the sector Macro continues to be stable. Goldman Sachs is ramping up coverage on the cement sector as there is demand for smaller midcap names as well.
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