UltraTech hits new high, nears Rs 10,000-mark; stock up 6% in two days

A sharp surge in the stock price has seen the market capitalisation of this Aditya Brila Group firm near the Rs 3 trillion mark, BSE data shows.

Shares of UltraTech Cement hit a new high at Rs 9,960, as they rallied 3 per cent on the BSE in Tuesday’s intra-day trade in an otherwise subdued market on expectations of strong demand. In past two days, the stock has surged 6 per cent, and now sen inching towards the Rs 10,000-mark. In comparison, the S&P BSE Sensex was down 0.07 per cent at 69,877 at 12:42 PM.

The stock of the country’s largest cement manufacturer is trading higher for the fourth straight day, gaining 8 per cent during the period. In past one month, the stock has rallied 14 per cent, as compared to 7.7 per cent gain on the S&P BSE Sensex. Thus far in the calendar year 2023, the market price of UltraTech Cement has zoomed 42 per cent, as against 14 per cent rise in the benchmark index.

A sharp surge in stock price has seen the market capitalisation (market cap) of the Aditya Brila group firm UltraTech near the Rs 3 trillion mark. Currently, the company’s market cap stood at Rs 2.87 trillion, the BSE data shows.

Cement demand moderated in November mainly due to festivals, labour unavailability, regional headwinds and a slow pick-up in Individual Homebuilder (IHB) and rural demand. However, brokerage firm Motilal Oswal Financial Services anticipates a rebound in December 2023, led by a strong project pipeline in key sectors such as infrastructure, real estate, and private capex. Further, OPM should improve in second half of financial year 2023-24 (H2FY24), backed by price hike and cost benefits.

Meanwhile, on November 29, UltraTech said that it acquired a 0.54 mtpa cement grinding assets of Burnpur Cement, located at Patratu in Jharkhand for a consideration of Rs 169.79 crore. This investment marks the company's entry in Jharkhand.

On November 30, UltraTech announced that Kesoram had decided to demerge its cement business and approached the company in relation to it. UltraTech will issue one equity share of the face value of Rs 10 for every 52 equity shares of Kesoram, also of face value Rs 10

The transaction will provide UltraTech with the opportunity to extend its footprint in the highly fragmented, competitive, and fast growing Western and Southern markets in the country. It will help enhance UltraTech’s geographic reach in Southern markets such as Telangana where UltraTech currently does not have any cement manufacturing plant. The operations will be bolstered by economies of scale resulting from synergies in procurement, logistics and fixed costs.

Post scheme of arrangement, UltraTech’s cement capacity will stand augmented to 149.14 mtpa including its overseas operations. The proposed transaction will accelerate the company’s path to achieving its stated goal of 200 mtpa cement capacity in India, reaffirming its belief in the Country’s growth potential, the company said.