UltraTech Cement Acquires 8.69% Stake in Star Cement, Intensifying Competition with Ambuja Cements

UltraTech Cement has acquired an 8.69% stake in Star Cement, a company based in Meghalaya. This acquisition, valued at Rs 851 crore, was made from the promoters of Star Cement. The move intensifies competition with Ambuja Cements, part of the Adani Group. This development follows UltraTech's recent acquisition of a controlling stake in India Cements Ltd.

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UltraTech Cement is actively expanding its capacity through acquisitions and enhancements. This strategy is in response to competition from Ambuja Cements, which is also increasing its capacity. Both companies are acquiring smaller cement players to strengthen their market positions and achieve growth targets sooner.

Acquisition Details and Market Impact

The acquisition marks the third major purchase by the Aditya Birla Group's flagship company in two years. Previous acquisitions include India Cements, Kesoram Industries' cement business, and UAE-based RAKWCT. Meanwhile, Ambuja Cements has acquired Sanghi Industries and Penna Industries as part of its growth strategy.

Ambuja Cements has also announced plans to acquire Orient Cement from the CK Birla Group. Additionally, it has acquired smaller facilities like My Home, while its subsidiary ACC has taken over Asian Concretes and Cements. These moves have helped Adani Cement reach a capacity of over 100 MTPA by 2024.

Star Cement's Market Presence

Star Cement, with an installed capacity of 7.7 MTPA, is a leading brand in North East India. It is expanding into Eastern markets like West Bengal and Bihar. The company was incorporated in November 2001 and had a turnover of Rs 2,910.66 crore in FY24, with a profit after tax of Rs 295 crore.

The board of UltraTech Cement approved acquiring up to 3.70 crore equity shares of Star Cement at a price not exceeding Rs 235 per share. The total cost will not exceed Rs 851 crore, excluding STT and other levies.

Stakeholders and Financials

UltraTech Cement acquired more than 3.36 crore shares or an 8.32% stake in Star Cement for Rs 766 crore through an open market transaction on the NSE. The shares were bought at an average price of Rs 227.70 each, making the deal worth Rs 765.68 crore.

Rajendra Chamaria and his family, part of Star Cement's promoter group, sold their shares to UltraTech Cement. Other promoters controlling Century Ply are not selling their shares.

Stock Market Reactions

Shares of Star Cement closed at Rs 232.05 on Friday at BSE, up by 1%. On Thursday, they settled at Rs 229.75, indicating that UltraTech offered a premium of 2.3%. Meanwhile, UltraTech Cement's shares ended at Rs 11,400 on BSE, down by 0.50% from the previous close.

Star Cement aims to reach a manufacturing capacity of 25 MTPA by 2030. It operates seven plants with a workforce of around 4,000 employees across locations like Lumshnong in Meghalaya and Sonapur near Guwahati.