India’s Ultratech buys stake in India Cements
India's Ultratech is buying a 23pc stake in fellow domestic cement producer India Cements in a further consolidation of the sector.
Ultratech is spending 18.85bn rupees ($226mn) in acquiring 70.6mn shares of India Cements at a price of Rs267/t share. The share value of India Cements on the Bombay Stock Exchange on 27 June rose by more than 13pc to touch a 52-week high of Rs299/t share following Ultratech's purchase. India Cements produced 9.45mn t of cement and recorded consolidated revenues of Rs51.12bn during India's April 2023-March 2024 fiscal year.
Ultratech's move comes two weeks after Adani Group-controlled Ambuja Cements acquired Penna Cement for $1.25bn. Penna has 10mn t/yr of operational cement manufacturing capacity and is adding another 4mn t/yr over the next 12 months.
Adani's latest deal will raise the group's capacity to 89mn t/yr, reinforcing its position as the country's second-largest cement producer after Ultratech. Ultratech operates 146mn t/yr of capacity and aims to reach 200mn t/yr by 2030, while Adani is targeting 140mn t/yr by 2028.
The Indian cement sector has seen increasing consolidation as smaller regional producers face an extremely challenging operating environment. Such regional participants have been exiting the sector as they are unable to compete with national firms, giving way to a wave of consolidation in the industry.
The aggressive medium-term capacity targets of larger companies are unlikely to be achieved organically. Capacities totalling more than 200mn t/yr have changed hands in the past decade, according to industry estimates.
Rapid urbanisation, a growing middle class and affordable housing, as well as the construction and other infrastructure sectors, are expected to drive growth in the cement sector. India is the world's second-largest cement market after China with an installed capacity of about 550mn t/yr.
There is significant potential for cement sector growth in India. The country's consumption is 242kg per capita compared with a global average of 525kg, Adani said after it entered the sector in September 2022 with the acquisition of ACC and Ambuja Cement, the two listed Indian subsidiaries of Holcim, for $10.5bn.
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Japan’s Shikoku to shut Ikata reactor for maintenance
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Venezuela opposition harassment builds before elections
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Taiwan's Taipower ends Hsinta biomass conversion plan
Taiwan's Taipower ends Hsinta biomass conversion plan
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