Star Cement shares surge 20% in six sessions; what’s fuelling rally

Shares of Star Cement continued gaining streak for the sixth straight session on Wednesday, ending 6% higher amid growing speculation that Adani group’s cement arm, Ambuja Cements, is in talks to acquire stake in the company. The share price of Star Cement, which is a market leader in the North-East region, has risen nearly 20% in the last six sessions amid acquisition buzz.

The exchanges had sought clarification from Star Cement on reports of a potential acquisition by Adani-led Ambuja Cements. The cement manufacturer clarified to exchanges that news is “speculative” and it is not engaged in any discussions in this regard.

“We have always made and will continue to make disclosures in compliance with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,” it says in a BSE filing today.

On Wednesday, Star Cement shares ended 6% higher at ₹207.90 on the BSE, with a market capitalisation of ₹8,403 crore. Early today, the smallcap stock opened marginally higher at ₹196.45 and gained as much as 13.7% to hit an intraday high of ₹222.95.

At the current level, Star Cement share is down nearly 19% from its 52-week high of ₹255.95 on June 22, 2024, while it has risen 28% from its 52-week low of ₹162.30 hit on December 8, 2023. The counter has risen 22% in the past 12-month, while it rose nearly 2% in six months and 1% in a month.

Meanwhile, Ambuja Cements shares ended 0.41% lower at ₹564.40 on the BSE with a m-cap of ₹1.39 lakh crore.

Earlier in October this year, Ambuja Cements signed a deal to acquire a 46.8% stake in Orient Cement Ltd (OCL) for an equity value of ₹8,100 crore or ₹395.40 per share. The transaction will trigger an open offer of 26% to acquire shares from public shareholders. The current deal comes following Ambuja Cements' acquisition of Hyderabad-based Penna Cement, promoted by P Prathap Reddy and family, for ₹10,422 crore in June this year.

Besides in April this year, Ambuja inked a pact to acquire My Home Group's 1.5 MTPA cement grinding unit in Tuticorin, Tamil Nadu. In August last year, it acquired Gujarat-based Sanghi Industries at an enterprise value of ₹5,000 crore.

As per media report, Adani Group is looking for several acquisitions in the cement sector as part of its strategies to become the largest cement manufacturer in India. This includes Gujarat’s Saurashtra Cement, Vadraj Cement owned by ABG Shipyard, and Jaiprakash Associates’ cement business.

Currently, Adani Cement, including Ambuja and its subsidiaries ACC and Sanghi Industries, is the country’s second-largest cement producer after Aditya Birla Group’s UltraTech Cement, with the group’s cement capacity of 78.9 MTPA and 18 integrated cement manufacturing plants as well as 19 cement grinding units across the country. Ambuja is aiming to take parent Adani Cement's operational capacity to 97.4 million tonnes per annum (MTPA) by March 2025. 

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