Ultratech and Ambuja Cement expand amid industry consolidation
Ultratech and Ambuja Cement are actively looking for new assets in the cement sector. To drive business expansion plans After the latest acquisition Both companies are active in mergers and acquisitions (M&A), although they have withdrawn from a potential deal with Orient Cement due to high prices.
UltraTech, part of the Aditya Birla Group and led by Kumar Mangal Birla, recently acquired Kesoram and India Cement, but they are now focusing on consolidating these purchases rather than acquiring additional assets.
Ambuja Cement, owned by Gautam Adani, is offering a more attractive deal to Orient Cement, whose share price has risen 70% in the past year. Ambuja aims to increase production capacity to 140 million tonnes per annum (mtpa). ) by fiscal year 2028, while Ultratech aims to increase this to 200 million tonnes per year by fiscal year 2027. This fierce competition makes cement assets more valuable.
Many private equity firms hold stakes in Indian cement companies. and is ready to sell if a good offer is received. For example, True North has acquired a majority stake in Sri Digvijay Cement and may consider exiting at an appropriate price.
As of March 2024, Ultratech has a net debt of Rs 3,942 crore, while Ambuja’s cash reserves significantly exceed its Rs 699 crore debt. Market valuations for Ultratech stand at Rs 3.12 trillion, while Ambuja’s is Rs 1.37 trillion.
This consolidation in the cement industry is happening even though cement prices haven’t significantly increased. However, industry players remain optimistic about price improvements in the second half of the fiscal year.
Key points
Ultratech and Ambuja Cement are still looking for ways to expand through mergers and acquisitions.
The acquisition of Orient Cement helped Ultratech, but it is still concentrating on new acquisitions.
Ambuja Cement’s growth is accelerating. with a goal of 140 MTPA of manufacturing capacity by the fiscal year 2028.
In the cement industry, fierce rivalry leads to higher valuations.
If they get a good offer, private equity firms might sell their cement company shares.
