UltraTech Cement Acquires 8.69% Stake in Star Cement for ₹851 Cr

UltraTech Cement Ltd, one of India’s leading cement manufacturers, has recently announced the acquisition of an 8.69% equity stake in Star Cement Ltd for ₹851 crore. The deal involves the purchase of up to 3.7 crore equity shares at a price not exceeding ₹235 per share, excluding applicable taxes and levies. This strategic investment marks UltraTech’s entry into Star Cement as a minority stakeholder. The move comes after Star Cement's promoters and promoter group entities proposed selling their equity holdings, which led to UltraTech’s decision to acquire a significant stake. The transaction received approval during UltraTech Cement's board meeting held on December 27.

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The announcement of this deal caused an immediate reaction in the stock market. Star Cement's shares  surged over 7%, reaching ₹247.30 during early trading hours at 9:20 am IST. The stock's sharp rise reflects market optimism about the potential synergies and strategic benefits arising from UltraTech’s investment in Star Cement.

Expanding Footprints with Strategic Acquisitions

This acquisition is part of UltraTech Cement’s broader strategy to expand its footprint in the Indian cement industry, which is witnessing a phase of consolidation. The company has been actively pursuing growth through acquisitions. Earlier in December, the Competition Commission of India (CCI) approved UltraTech Cement's proposed acquisition of India Cements Limited (ICL). This approval paved the way for UltraTech’s ambitious plans to enhance its presence in the highly competitive southern cement market.

In July 2023, UltraTech announced the acquisition of a 32.72% stake in India Cements from its promoters and their associates for ₹3,954 crore. This deal was aimed at strengthening its position in key southern states, particularly Tamil Nadu. In addition to this, UltraTech also unveiled a ₹3,142.35 crore open offer to acquire a further 26% shareholding in ICL from its public shareholders, signaling its intent to establish a commanding presence in the southern region.

Industry Trends and Outlook

The Indian cement industry is currently undergoing a phase of consolidation, with intense competition among major players to acquire smaller companies. The rivalry is primarily fueled by the growing demand for cement, driven by increased government spending on infrastructure projects and urban development. Industry experts project an 8% growth in sales by 2025, supported by these factors. Companies like UltraTech Cement are strategically positioning themselves to capture this growth by expanding their operational capabilities and market reach.

November saw signs of recovery in cement demand after a subdued October, with international brokerage CLSA predicting stronger growth in the second half of FY25 and FY26. CLSA remains optimistic about the sector, emphasizing UltraTech Cement as a top contender poised to benefit from the anticipated rebound in demand.

Positioning for the Future

UltraTech Cement’s recent moves, including its investment in Star Cement and acquisition of stakes in India Cements, highlight its focus on long-term growth and market leadership. By diversifying its portfolio and targeting high-growth regions, UltraTech aims to consolidate its position as a dominant player in the industry. The company’s investments are expected to enhance production capacities, operational efficiencies, and its overall competitiveness in the domestic market.

As the cement industry gears up for a more favorable market environment by 2025, UltraTech's strategic decisions underline its commitment to staying ahead in an evolving landscape.