Orient Cement shares rally 14.5% on report CK Birla approached Gautam Adani for stake sale
₹214.8 apiece. This significant increase was attributed to a media report stating that CK Birla had approached Gautam Adani to sell his promoter stake in the company. The Economic Times, quoting sources, reported that CK Birla reached out to Gautam Adani after turning down initial offers from other domestic players that did not meet his valuation requirements.
According to the report, senior management executives on both sides have also met to discuss a potential deal for Adani, who already owns India's second-largest cement capacity. With the recent acquisition of Sanghi Industries, Adani currently has a total cement capacity of 110 MTPA. The talks with Adani, as per ET, have been ongoing for the past few months, but there is no guarantee of a transaction.
Birla's valuation demand, which is double the current market price, could be a deal-breaker. According to Trendlyne data, the promoter held a 37.9% stake in the company as of the September 2023 quarter. The CK Birla Group is one of India's most well-established and diversified conglomerates, with a rich legacy spanning over a century.
The group boasts a wide spectrum of businesses across various industries, including manufacturing, automotive, healthcare, and technology. In its latest report, domestic brokerage firm BoB Capital Markets has downgraded its rating on Orient Cement to 'sell' from 'HOLD' and assigned a target price of ₹128 apiece. "Orient Cement has guided a capex of ₹10 billion each in FY24 and FY25 for brownfield expansion at Chittapur, Karnataka, and the relocated grinding unit at South Madhya Pradesh.
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