Shares of India Cements rally over 30% in one week as UltraTech deal impresses investors
India Cements have rallied 33% in this week so far attaining a new all-time high of Rs 308.10 in Friday’s session after a 24% stake of the company was bought by UltraTech Cement.
Ace investor Radhakishan Damani and related entities had sold around 6.91 crore shares or about 24% stake in India Cements to Ultratech Cement through a block deal on Thursday.
The total stake sold by Damani and his entities comes to around 24% and the sale was done at an average price of Rs 277 apiece. Through the deal, Damani and his controlled entities bagged around Rs 1,914 crore.
UltraTech's stake in Chennai-based India Cements pits it against Adani group's Ambuja and ACC cement companies for gaining ground in terms of market share.
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Analysts said both Adani and UltraTech have been trying to gain market share and hence consolidation in the cement industry has been an ongoing process now.
«Particularly in South India, there has been a lot of stress. And because of overcapacity and cement prices were not remunerative enough, so companies like India Cements were making losses. So, it is a matter of time that these guys get consolidated by the larger players,» said Rakesh Arora, Founder, Go India Stocks.
Analysts at brokerage Prabhudas said competition is expected to increase in the cement industry with players trying to gain market share.
Shares of India Cements have surged approximately 39% in the last one year while in the
