UltraTech Cement Buys 8.7% Stake in Star Cement for ₹851 Crore
Introduction
UltraTech Cement, a leader in India’s cement industry, has made a strategic move by acquiring an 8.7% stake in Star Cement for ₹851 crore. This acquisition aligns with UltraTech’s broader strategy to strengthen its market presence amid growing competition in the cement sector.
Details of the Acquisition
The acquisition involves the purchase of 3.7 crore equity shares at a maximum price of ₹235 per share, excluding taxes and levies. The deal was approved during UltraTech’s board meeting on December 27, 2024, and represents a non-controlling minority stake in Star Cement.
Star Cement’s promoters and promoter group entities initiated the sale of their equity holdings, leading to UltraTech’s investment decision. This transaction signifies UltraTech’s calculated approach to diversifying its portfolio while maintaining a strategic foothold in the industry.
Strategic Intent Behind the Move
UltraTech Cement’s acquisition highlights its strategy of leveraging opportunities in India’s consolidating cement market. By investing in Star Cement, UltraTech aims to strengthen its position without assuming controlling interest, ensuring operational flexibility while gaining access to Star Cement’s market insights.
Earlier this year, UltraTech expanded aggressively with similar acquisitions, including a 32.72% stake in India Cements for ₹3,954 crore. Such investments underline UltraTech’s intent to dominate regional markets, particularly in the southern states like Tamil Nadu, where competition is fierce.
Market Reaction and Block Deal Details
Star Cement witnessed a large block trade during the session, with 3.36 crore shares or 8.3% equity worth ₹766 crore exchanged on the market. Following the announcement, Star Cement’s shares jumped over 7%, trading at ₹247.30 in the early hours of December 27.
The strong market reaction reflects investor confidence in UltraTech Cement’s strategic decisions and the growth potential of Star Cement under this new collaboration.
Recent Approvals and Previous Acquisitions
UltraTech Cement has been on an acquisition spree to consolidate its market position. On December 20, 2024, the Competition Commission of India (CCI) approved UltraTech’s acquisition of India Cements Limited (ICL).
In addition to the stake purchase in India Cements, UltraTech also launched a ₹3,142 crore open offer to acquire 26% of ICL shares from existing shareholders. These moves indicate UltraTech’s aggressive expansion strategy to secure its dominance in the cement industry.
Indian Cement Industry Outlook
The Indian cement sector is undergoing a phase of consolidation, with leading corporate houses acquiring smaller players to strengthen their foothold. Analysts expect an 8% growth in cement sales in 2025, driven by increased government spending on infrastructure projects like highways and urban development.
Despite a weak performance in October, November saw a gradual recovery in cement volumes. International brokerage CLSA remains optimistic about a demand rebound in FY25 and FY26, citing increased infrastructure spending and economic growth. Among cement players, CLSA has placed its preference on UltraTech Cement, acknowledging its leadership and robust investment strategy.
Conclusion
UltraTech Cement’s ₹851 crore investment in Star Cement reflects its commitment to growth through strategic acquisitions. By taking a calculated stake in Star Cement, UltraTech not only expands its market reach but also positions itself to benefit from the anticipated resurgence in demand within the cement industry.
With ongoing projects, government-led infrastructure development, and an optimistic industry outlook, UltraTech Cement continues to solidify its leadership in India’s cement sector.
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