UltraTech's 23% stake in India Cements seen as promising market investment: CFO Atul Daga

UltraTech has now become the second-largest shareholder, after reportedly purchasing the entire stake of serial investor Radhakishnan Damani and his associates.

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Picking up a large stake in India Cements is purely a non-controlling financial investment, said Ultratech Cement management on July 19.

Last month, UltraTech snapped up a big chunk of India Cements by acquiring a 23 percent non-controlling stake in the struggling rival for around Rs 1,900 crore via block deals.

Initially, UltraTech bought 6.02 crore ICL shares, or a 19.4 percent stake. Following this, the board met again and approved the acquisition of an additional 3.4 percent, or 1.04 crore equity shares, for up to Rs 285 apiece.

"We found this as a good opportunity to buy in and the way markets are, this should prove to be a good investment," said Ultratech Cement CFO Atul Daga in a post-earnings conference call.

This follows market speculation about UltraTech potentially acquiring India Cements following its substantial stake purchase.

Also Read | Price hikes possible after monsoon in second half of 2024: Ultratech Cement

UltraTech has now become the second-largest shareholder, after reportedly purchasing the entire stake of serial investor Radhakishnan Damani and his associates.

It is worth mentioning that Southern India has been the scene of frantic mergers and acquisitions activity over the past few quarters, as more national players emerge in a traditionally fragmented and localised market.

Adani Cement, which owns Ambuja Cements and ACC, made a recent splash in the southern market by acquiring unlisted player Penna Cement for more than Rs 10,000 crore, and has been eyeing other assets.

UltraTech, which has been carrying out greenfield and brownfield expansions in the southern market, is in the process of merging Kesoram Industries' cement assets with itself.

Kesoram has a significant presence in some southern India markets, with UltraTech also said to be in talks to acquire Orient Cement, owned by UltraTech chairman Kumar Mangalam Birla's uncle CK Birla. Orient Cement too has a significant presence in some southern states.

Also Read | UltraTech Q1 Results: Net profit flat on-year at Rs 1,695 crore, misses estimates

Ultratech Cement incurred several one-time expenses during Q1FY25 due to multiple acquisitions to expand the capacity and network of plants, impacting their P&L. "But this is a one-time effort and our expenses should normalize like any other normal quarter going forward," Daga noted.