Shares of Orient Cement climbed 8 per cent on Wednesday amid a media report suggesting promoter CK Birla has approached Gautam Adani to sell his stake in the listed cement company. It suggested that the industrialist had rejected initial offers from peers for failing to meet his valuation demand. As per the report, the senior management executives on both sides met to discuss a potential deal. Adani Cement, which recently acquired Sanghi Industries, has a total cement capacity of 110 MT and has the second-largest domestic cement capacity.
The stock rose 7.71 per cent to hit a high of Rs 203.90 on BSE.
Birla owned 37.9 per cent stake in Orient Cement as on June 30, which as of Tuesday’s market capitalisation of Rs 3,878 crore was valued at Rs 1,469.82 crore. The talks with Adani have been ongoing for the past few months. The report, however, suggested that there is no guarantee of a transaction. Birla’s valuation demand, which is double the current market price, could be a deal breaker.
CK Birla group has presence in a diverse range of industries such as auto ancillary products, building products, engineering products, cement, paper, fan and electrical items. The promoters have been operating the cement business for nearly four decades.
Orient Cement’s major market is Maharashtra followed by Telangana, Karnataka and Madhya Pradesh. The company also has a modest presence in Gujarat. Analysts noted that pricing optimism in the cement sector towards the end of September remains high across regions.
“Living up to the feedback of a ripe expectation, cement prices have indeed seen a sharp spike in South India in October and its rub-off effect has been witnessed in West India as well. Although with some lag, hikes are seen getting absorbed in North and Central India, too. While pricing optimism is on a high, its sustainability in the upcoming festive season may be the real litmus test,” ICICI Securities said in a sectoral outlook.
It has maintained its stance that even as fundamental concerns remain intact; the hikes may improve cement sector sentiment in the near term.