Heidelberg Cement Stock Zooms 6% On Acquisition Buzz; Ultratech, Adani May Show Interest In Company

Haryana-based HeidelbergCement India which has a capacity of 13.4 million tonnes per year, witnessed strong buying on Thursday so much that its shares rallied by nearly 6% on BSE. HeidelbergCement has been in the news for the past week, due to acquisition buzz.

In the latest development, a media report has mentioned that the country's cement giants Ultratech Cement and Adani Group are joining the race for the acquisition of HeidelbergCement from its Germany-based parent Heidelberg Materials. Earlier, reports mentioned JSW Cement has shown interest in the company to which HeidelbergCement clarified that it is not aware of the development.

On BSE, HeidelbergCement shares gained by at least 5.8% with an intraday high of Rs 198.25 apiece. The stock currently trades over 4.5% at Rs 195.85 apiece with a market cap of Rs 4,438.22 crore.

As per a Hindu BusinessLine report, UltraTech Cement and Adani Cement may join the race along with Parth Jindal-led JSW Cement to acquire Heidelberg Cement, put on the block by its parent Germany-headquartered Heidelberg Materials.

However, both UltraTech Cement and Adani Cement did not respond to Businessline's query.

The Aditya Birla Group's flagship company Ultratech Cement is the largest in its sector in terms of market share, while Adani Group is the second largest cement player with its Ambuja Cements and ACC.

On Thursday, the majority of Adani shares traded lower. The Group's flagship company, Adani Enterprises along with Adani Ports, and Adani Green Energy dropped marginally, while Adani Total Gas, Adani Wilmar and Adani Power shed around 1% each. Adani Energy Solutions traded in green but with a marginal upside. Also, among its cement stocks, Ambuja Cements was up 1%, while ACC shares fell.

Meanwhile, Ultratech Cement shares gained by at least 1.5%.

In the September 2023 quarter, Ultratech Cement reported a total sales volume of 25.66 million tonnes in India, down by 12% sequentially but up by 15% YoY. Consolidated sales including the international market stood at 26.69 million tonnes by the end of the quarter, down by 11% QoQ but up by 16% YoY.

Ultratech Cement's total grey cement manufacturing capacity in India now stands at 132.45 mtpa. Last month, the company annnounced the commissioning of 1.2 mtpa brownfield cement capacity at Magdalla, Gujarat, taking the Unit's capacity to 1.93 mtpa.

Moreover, Adani holds 63.15% of Ambuja Cements and 56.69% in ACC (of which 50.05% is held through Ambuja Cements). Adani's combined cement business has installed a production capacity of 67.5 MTPA. The two companies are among the strongest brands in India with immense depth of manufacturing and supply chain infrastructure, represented by their 14 integrated units, 16 grinding units, 79 ready-mix concrete plants and over 78,000 channel partners across India.

Earlier, an Economic Times report had said that JSW Cement, the building-materials business of steelmaker JSW Group, is in initial talks with Germany's Heidelberg Materials to acquire the latter's 13.4 million-tonne-a-year cement businesses in India. However, on October 3rd, HeidelbergCement clarified to exchanges that the company is "unaware about any such development and we do not comment on market speculations."

Germany-based Heidelberg Materials entered India in 2006 and has consistently pursued its strategy of growth in developing markets. The Group acquired majority stakes in Mysore Cements and Cochin Cements, as well as the Indorama Cement joint venture, which was converted to a full acquisition in 2008. Following the merger with Indorama Cement, Mysore Cements was renamed HeidelbergCement India Ltd. (HCIL) in 2009. The existing HCIL facilities in Central India were expanded as part of a brownfield project, increasing its capacity from 2 million tonnes per year to 5 million tonnes in 2013.

With the acquisition of Italcementi in the second half of 2016, the Group has more than doubled its installed capacity making it one of the top 10 players in India. The enlarged India footprint now covers 12 States served by 4 Integrated Cement plants, 4 Grinding Units and a Terminal, having an installed capacity of 12.6 Million Tonnes. Its manufacturing locations are at Damoh (State of Madhya Pradesh), Yerraguntla (State of Andhra Pradesh), Sitapuram (State of Telangana), Ammasandra (State of Karnataka), Jhansi (State of Uttar Pradesh), Sholapur (State of Maharashtra), Chennai (State of Tamil Nadu), and Cochin (State of Kerala).

This has enabled the Group to improve its product offerings over a wider geographic area. The products from its manufacturing units are sold under the brand names "Mycem" and "Zuari".

In the annual report of FY23, HeidelbergCement India's CFO Anil Kumar Sharma said that they believe the cement demand will grow by 7-8% annually in the short to medium term and hence the company will be able to increase our capacity utilisation in coming years.