UltraTech Cement, the largest cement company in India, recently decided to buy about 8.69% of Star Cement. This deal could cost them up to Rs 851 crore (which is a lot of money!). They plan to buy 3.70 crore shares at a price of Rs 235 each, paying in cash.
This purchase values Star Cement at around USD 150 for every tonne of cement they can produce, based on their current capacity. Star Cement is strong in the Northeast part of India and has a plant in Meghalaya along with four other grinding units. They plan to increase their production capacity to 25 million tonnes by 2030.
After this news, ICICI Securities, a company that gives financial advice, changed its recommendation for Star Cement from “buy” to “hold.” They worry about possible future mergers and acquisitions (M&A) in the cement industry because of this deal. Many people also own shares of Star Cement, which increases speculation about more financial activity.
Star Cement’s stock price fell a bit on Monday but UltraTech’s stock rose slightly. ICICI Securities believes the high valuation and possible changes in ownership make it a cautious investment right now. Star Cement’s earnings grew in the last fiscal year, reaching Rs 2,910.66 crores
Leave a Reply