UltraTech’s India Cements stake buy a win-win for both. Here’s what analyst said on industry consolidation

UltraTech Cement‘s Rs 1,885 crore stake purchase in India Cements is expected to be mutually beneficial for both companies and would consolidate its position in South India at a time when the Adani Group’s acquisitive spree is intensifying competition between the two players.

This deal can be mutually beneficial for UltraTech Cement and India Cements as the former could gain a market share in the undersupplied Andhra Pradesh/Telangana belt by strategic cement supply agreement while the latter can improve its financial performance helped by volume improvements, a Prabhudas Lilladher (PL) note said.

PL sees cement sector consolidation to continue in favour of companies with strong balance sheets, with competition intensifying going forward.

India’s largest cement maker and an Aditya Birla Group company, UltraTech on Thursday announced that its board of directors has approved picking up a 23% ( up to 7.06 crores equity shares) stake in India Cements for Rs 267 per share. The deal, which has been described as a “financial investment” by UltraTech, would be done in cash .

Chakri Lokapriya, Managing Partner at RSB, sees this acquisition plan as a measure to negate Ambuja’s growing clout in South India. The Adani Group company is the next big player in this geography and trails UltraTech which has a 10% market share, he added.”With the recent acquisition by Adani of Sanghi Industries, UltraTech had to do something to maintain its position in the south. So, now if you look at UltraTech’s plans, they wanted to add about 15 million tonnes in the South. India Cements has about 15 million tonnes,” Lokapriya said in a chat with ET Now.While the acquisition has to still go through, UltraTech’s market share could go up to 20% after bagging India Cements stake, he opined. For him, it is a three-corner fight, with Dalmia Bharat Group as another strong contender.Motilal Oswal argues for the company’s valuation premium saying that it is supported by growth plans. It continues to believe in the company’s ability to gain market share, driven by its extensive operations, nationwide presence, and robust brand equity. Motilal also vouched for UltraTech warranting higher multiples. “The stock currently trades at 18.5x FY26E EV/EBITDA. We value the stock at 20x June 2026E EV/EBITDA to arrive at a target price of Rs 13,300,” MOFSL said, reiterating a buy.

Prabhudas too has a buy rating on the counter.

Meanwhile, Rahul Sharma of JM Financial Services keeps the cement sector on his wait and watch list, adding that the cement sector has been pretty strong and would start buying on dips once this euphoria cools down.

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