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Synopsis: UltraTech Cement Limited has announced the acquisition of a 23% stake in The India Cements Limited, purchasing up to 7.06 crore equity shares at Rs. 267 per share. This strategic investment, approved by UltraTech's Board of Directors on June 27, 2024, is purely financial and aims to strengthen UltraTech's position in the cement industry. Following the announcement, India Cements' shares surged by 10%, reflecting strong market confidence in the deal.
This investment is purely financial and not classified as a related party transaction. UltraTech aims to bolster its strategic position within the competitive cement industry through this acquisition.
Financial and Market Impact
Following the announcement, India Cements' shares surged, hitting an upper circuit limit of 10%. The stock price rose to Rs. 289.20 on the BSE, pushing the company's market capitalization to Rs. 8,962.63 crore. This year, India Cements' stock has seen a notable increase of 31.31%, with a 7.58% gain in 2024 alone.
Background and Performance of India Cements
India Cements, established in 1946 and headquartered in Chennai, has demonstrated consistent financial performance over the years. The company reported a turnover of Rs. 5,112 crore in FY24, an increase from Rs. 5,608 crore in FY23, and Rs. 4,858 crore in FY22. Prominent shareholders Radhakishan Shivkishan Damani and Gopikishan Shivkishan Damani collectively held a 20.78% stake in the company as of the last quarter ending in March.
Strategic Significance
The acquisition, expected to be completed within a month, is being financed through cash consideration. This move underscores UltraTech's commitment to expanding its footprint and influence in the cement sector. As a leader in the industry, UltraTech's strategic investments are poised to enhance its market share and operational capabilities.
