India Cements Posts Q2 EBITDA Loss Amid Financial Strain; UltraTech Acquires 32.7% Stake

Keywords: India Cements Q2 results, EBITDA loss, UltraTech acquisition, India Cements stock, open offer, debt, cement sector, UltraTech stake, India Cements operational performance

India Cements Ltd. has reported a significant Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) loss of ₹163 crore in the September quarter of 2024, a sharp contrast to the positive EBITDA of ₹7.7 crore recorded in the same quarter last year. This downturn highlights ongoing financial challenges for the company, which is grappling with heavy debt and low operational utilization levels.

UltraTech’s Strategic Stake Acquisition

• In a move signaling consolidation within the cement sector, UltraTech Cement acquired a 32.7% stake in India Cements for over ₹4,000 crore in July 2024. This acquisition followed UltraTech’s initial purchase of a 22.77% stake in June 2024 at ₹268 per share, bringing its total ownership close to 55.5%. The July acquisition also triggered an open offer priced at ₹390 per share, presenting a premium to the market price at the time and increasing UltraTech’s influence over India Cements.

Financial Pressures and Operational Challenges

India Cements has been facing multiple operational and financial issues. The company’s promoter exited amid a mounting debt load exceeding ₹2,000 crore, as operational performance remained subpar. Utilization levels have been low, and EBITDA per tonne fell below ₹200, underlining the impact of high costs and low efficiency on profitability. These challenges have affected investor confidence, with the company’s shares experiencing volatility after the Q2 earnings report. Despite a dip, shares have shown some recovery, currently trading at ₹356.5.

Sectoral Outlook and Future Prospects

UltraTech’s strategic investments in India Cements could support a turnaround, provided operational synergies are successfully realized. India Cements’ decision to step out of the Futures & Options (F&O) space may indicate a re-evaluation of risk management strategies to stabilize the stock amid market fluctuations.

• The cement industry is closely watching this acquisition, as the synergies between UltraTech and India Cements could reshape the sector’s competitive landscape, particularly if operational efficiencies improve.

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