Shares of Cement companies surge after UltraTech-India Cements deal as consolidation rises

Shares of other cement companies, particularly those based in South India are surging anywhere between 3% to 14% after the UltraTech - India Cements deal. Consolidation within the space is increasing and this is the second instance this month where a South-based company has been acquired or a stake has been purchased in.

Shares of Orient Cement are trading with gains of over 9% in today's session. Shares of other companies like Shree Digvijay Cement, Heidelberg Cement, Sagar Cements, JK Lakshmi Cement and Deccan Cements are also trading with gains between 3% to 7%.

Earlier on Thursday, UltraTech's board approved the acquisition of nearly 23% stake in India Cements for a total consideration of ₹1,885 crore. With this, India's largest cement company has increased its presence in the Southern part of the country.

The deal comes just a few days after Adani Cements had acquired Penna Cements, another company based in the south for an enterprise value of ₹10,422 crore.

In an interaction with CNBC-TV18 in April last year, Orient Cement had clarified that the company is neither on the block, nor is it looking at inorganic growth. Over the next 5-6 years, it plans to increase its capacity to 18 MTPA.

The consolidation in the cement space has been on for a while. Sagar Cements, another Andhra Pradesh-based company acquired Andhra Cements for ₹922 crore last year and added another 2.6 MTPA to its cement capacity and 1.65 MT of clinker capabilities.