The shares of this leading cement company jumped by 2.2 percent to an intraday high of Rs 11,940 a piece from its previous close after the board has approved the acquisition of a 32.72 percent equity stake in India cement for a value of Rs 3,954 crores.
Share price movement: With a market capitalization of Rs 3,41,961 crores the shares of Ultratech Cement Limited closed at Rs 11,845 per share on Monday. The stocks of this firm generated a return of 43 percent over the past year and 16 percent over the past 6 months.
What happened: As per Ultra Tech Cement Limited’s stock exchange filings the board, the company has announced that its board has approved buying a 32.72 percent equity stake in India Cements Limited from the promoters and their associates for an acquisition cost of Rs 3,954 crores, with each share priced at Rs 390 apiece
Previously In June 2024, UltraTech Cement invested in India Cements, acquiring a 22.77 percent stake or 7,05,64,656 equity shares at Rs 268 per share. With this announcement, Ultra tech becomes the major shareholder in India Cement holding a total of 55.49 percent stakes in the company. As per the filings, the time period by which the acquisition needs to be completed is six months.
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Indian Cements Limited is an another leading cement manufacturing company headquartered in Chennai and was incorporated in the year 1946. Indian Cements Limited’s turnover as of 31st March 2024 stood at Rs 5,112 crores.
Why it Matters: The deal is meant to help UltraTech Cement grow its business in the Southern part of India, especially in Tamil Nadu, where it currently doesn’t have much presence.
Financials: Comparing the financials of Ultra Tech Cement Limited from the current quarter to the previous quarter, the sales decreased by 11.5 percent from Rs 20,419 crores in Q4FY24 to Rs 18,070 crores in Q1FY25. Also for the same period, the net profits generated by the firm also decreased by 25 percent from Rs 2,259 crores to Rs 1,695 crores.
Ratios: The trailing 12 months’ Return on equity and return on capital employed of Ultra tech limited stood at 12 percent and 15 percent respectively. For the same period, the debt to equity of the firm stood at 0.19 times.
EBITDA: The EBITDA of Ultratech Limited decreased by 0.5 percent from Rs 3,223 crores in Q1FY24 to Rs 3,205 crores in Q1FY25.
Grey cement capacity: As of Q1FY25, the grey cement production capacity of UltraTech Cement Limited expanded by 8.7 MTPA taking the total grey cement capacity of the company to 149.5 MTPA in the country.
Outlets and domestic sales: UltraTech Building Solutions (UBS) outlets of the firm increased to 4,022 outlets as of Q1FY25. Also for the same period, Ultratech Limited has achieved 6.0 million tonnes in domestic sales which accounts for 20 percent of their total sales.
Shareholding Pattern: As of June 2024, UltraTech Cement’s shareholding pattern is as follows: promoters hold 59.98 percent, Foreign Institutional Investors (FIIs) own 18.15 percent, Domestic Institutional Investors (DIIs) hold 13.83 percent, and the government has a 0.05 percent stake. Within the DIIs, LIC India holds a 1.62 percent stake in the firm.
About the Company: Incorporated in the year 2000, UltraTech Cement is engaged in the manufacturing and sale of Cement and Cement related products primarily in India. The Company’s product portfolio includes UltraTech Cement, UltraTech Concrete, UltraTech Building Products, Birla White Cement, and White Topping. As of FY24, Ultra tech’s capacity market share stood at 22 percent.
Written By Zahal
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