Largecap Cement Major UltraTech Cement Acquires 8.7% In Star Cement For Rs 851 Crore; Stocks In Focus

Star Cement shares surged nearly 8% during Friday morning trades following UltraTech Cement's announcement of acquiring a minority stake in the company. This move is part of UltraTech's ongoing consolidation strategy, which also includes its recent acquisition of a majority stake in The India Cements Limited.

Cement giant UltraTech Cement Ltd has announced the acquisition of an 8.69% stake in Star Cement Ltd for Rs 851 crore. The deal includes the purchase of up to 3.7 crore equity shares at a price not exceeding Rs 235 per share, excluding applicable taxes and levies.

The transaction was finalized after UltraTech Cement's Board of Directors approved the investment during a meeting on December 27. The acquisition marks a strategic move by UltraTech to secure a non-controlling minority stake in Star Cement, further diversifying its regional presence in India's cement market.

Star Cement shares opened on the Bombay Stock Exchange (BSE) at Rs 237.80, higher than the previous close of Rs 229.75. The stock later climbed to an intraday high of Rs 247.75, nearing its 52-week high of Rs 248.35, before trading at Rs 234.74 on the National Stock Exchange (NSE) as of 1:25 pm, up over 2%.

The stake acquisition aligns with a proposal by Star Cement's promoters and promoter group entities to sell their equity holdings. The announcement triggered significant market activity, with 3.36 crore shares or 8.3% equity in Star Cement, valued at Rs 766 crore, exchanging hands through block deals.

This latest acquisition follows UltraTech Cement's earlier move to acquire India Cements Limited (ICL), solidifying its position in South India's competitive cement market. On December 20, the Competition Commission of India (CCI) approved UltraTech's acquisition of ICL, which was initially announced in July 2024.

As part of the deal, UltraTech purchased a 32.72% stake in India Cements from promoters and associates for Rs 3,954 crore, marking a major step in expanding its operations in Tamil Nadu and other southern states. Additionally, UltraTech launched an open offer of Rs 3,142.35 crore to acquire a 26% stake in ICL from its public shareholders.

With this acquisition, UltraTech now holds a 55.49% stake in India Cements, effectively making it a subsidiary. The move is expected to bolster UltraTech's presence in the south.

UltraTech shares, however, witnessed minor fluctuations during the day, opening at Rs 11,594.85 on the BSE, up from the previous close of Rs 11,457.30, before trading at Rs 11,409.05 on the NSE, down 0.45% as of 1:25 pm.

The Indian cement industry is witnessing a wave of consolidation as leading players aim to strengthen their market positions amid rising competition. UltraTech Cement's acquisitions of Star Cement and India Cements are part of this broader trend, with two major corporate groups aggressively acquiring smaller players to expand their reach.

Analysts forecast 8% sales growth for the cement sector in 2025, supported by increased government spending on large infrastructure projects. The industry is also expected to benefit from improved sales realizations and higher profit margins, providing a favourable outlook for market leaders like UltraTech.

The acquisition of India Cements is significant as it provides UltraTech with a stronger foothold in the South Indian cement market. Meanwhile, the investment in Star Cement reinforces UltraTech's presence in East India, a region known for its demand for infrastructure and housing projects.

The market reacted positively to UltraTech's strategic investment in Star Cement, with the latter's stock witnessing significant gains. However, UltraTech shares faced slight downward pressure, likely attributed to profit-booking amid its acquisition spree.