UltraTech’s stake buy in India Cements — Is a takeover now on the cards?

Ultratech enjoys a market share of ~23 percent on a pan-India basis

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26 Aug, 2025 12:21

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Highlights

• UltraTech has agreed to purchase a 23 percent stake in India Cements
• India Cements has a cement capacity of 14.5 MT
• UltraTech is looking to bolster presence in the southern region
• The cement sector is undergoing a wave of consolidation
• Adani group is targeting 140 MT capacity by 2028

With an aggregate capacity of 152.7 MTPA, Ultratech enjoys a market share of ~23 percent on a pan-India basis. However, its market share in the south is just about 10-11 percent. The management had earlier indicated that it was looking to consolidate its presence in the south, which remains very fragmented because of many small and mid-sized players. In our view, UltraTech will be looking to further increase its stake in the company and may launch an open offer in the coming months to gain control over the operations.

India Cements is one of the largest players in south India with clinker and cement capacities of 11.1 MT and 14.5 MT, respectively. The capacities are spread across multiple states, including Telangana (5MT), Tamil Nadu (6MT), Andra Pradesh (2.1MT), and Rajasthan (1.5MT). However, its operating margins far lag its peers due to several factors. Therefore, a possible takeover by a strategic player like UltraTech could drive significant margin expansion for India Cements on account of cost and distribution synergies.

Birla and Adani fighting for leadership

The stake sale comes at a point when the Indian cement industry is undergoing a wave of consolidation. The sector has already witnessed four strategic acquisitions in the last 20 months. The Adani group-owned Ambuja Cements, the second-largest cement player in the domestic market, has been on an aggressive capacity expansion spree and has readied a substantial cash war chest (~$3 billion) to target M&A opportunities. Ambuja recently announced the acquisition of south-based cement company Penna Cement (14 MT capacity) at an enterprise value of Rs 10,422 crore. The group has reiterated its ambition to reach 140MT cement capacity by 2028. The fight for market leadership between the Birlas and the Adanis is intensifying as UltraTech is looking to achieve a production capacity of 200 MT in the next 3-4 years.