India Cements shares jump 11% as CCI clears acquisition by UltraTech

Shares of India Cements rallied 11% in intraday trade on Monday after the Competition Commission of India (CCI) cleared UltraTech Cement’s acquisition bid. The approval came within two weeks after the regulator issued a show cause notice to UltraTech seeking clarification on the proposed deal. Billionaire Kumar Mangalam Birla-promoted UltraTech Cement has proposed to buy a majority stake in Chennai-based India Cements for ₹7,096 crore.

Boosted by the development, India Cements shares jumped 11% to hit a high of ₹376.30 on the BSE. The midcap cement stock, with a market cap of ₹11,365 crore, is hovering close to its all-time high of ₹385.50 touched on July 29, 2024, while it has risen 118% from its 52-week low of ₹172.55 hit on June 4, 2024.

In the last six months, India Cements shares have risen 56%, while it climbed 40% in the past one year and year-to-date. The counter has added over 2% in the last one week.

In a similar trend, UltraTech Cement soared as much as 1.4% to ₹11,585.40 during the session today.

The fair trade regulator on December 20 gave nod to UltraTech's acquisition of 32.72% shares in India Cements from the promoter entities at ₹390 a share and another 26% by way of an open offer.

“The CCI on December 2024 granted its approval to the acquirer to acquire 10,13,91,231 equity shares of ₹10 each representing 32.72% of the equity share capital of the company held by the promoters, members of the promoter group and the other shareholder,” India Cements said in an exchange filing on December 20.

“The CCI has granted its approval to the acquirer to make an open offer for up to 8,05,73,273 equity shares of ₹10 each constituting 26% of the equity share capital of the company, at a price of ₹390 per equity share, from the public shareholders of the company,” it added. 31,423,576,470

In June this year, the Aditya Birla Group flagship made a financial investment in India Cements to acquire 22.77% equity from ace investor Radhakishan Damani, the founder of the hugely popular DMart chain of hypermarkets, at a price of ₹268 per share. Post this deal, the promoter group approached UltraTech to sell an additional 32.72% stake at ₹390 per equity share. With this, the cement major intends to acquire 55.49% stake in India Cements.

Formed in 1946, India Cements is one of the leading cement manufacturers in South India with established presence in all five states in the region. It manufactures cement (Ordinary Portland Cement and Portland Pozzolana Cement in 37:67 mix) under the Coromandel, Sankar and Raasi brands.

Tushar Chaudhari, Research Analyst, Prabhudas Lilladher, says that the deal can be mutually beneficial for both companies as UltraTech can work of a strategic cement supply agreement to gain market share in undersupplied AP and Telangana belt and ICL’s financial performance can also improve as volume improves.

India Cements has 14.5 million tonnes per annum (MTPA) cement capacity (5 MTPA in Telangana, 6 mtpa in Tamil Nadu, 2.1 mtpa in AP, and 1.5 mtpa in Rajasthan) along with 11.13 mtpa clinker capacity; which complements well with UltraTech’s Southern capacities if it will be able to crack a deal with ICL promoters in future. UltraTech has 2 mtpa in Telangana, 5 mtpa in Tamil Nadu, 10.6 mtpa in AP.

A $8.4 billion building solutions company, UltraTech is the third largest cement producer in the world, outside of China, with a total grey cement capacity of 154.86 MTPA. 

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