UltraTech Cement offers to acquire 31.6% stake in UAE-based RAKWCT; stock rises

Cement major UltraTech Cement, a part of the Aditya Birla Group, has proposed to acquire a 31.6% stake in UAE-based (Ras al Khaimah Co. for White Cement and Construction Materials PSC) RAKWCT, a company listed on the Abu Dhabi stock exchange. This acquisition will be executed through UltraTech's wholly-owned UAE subsidiary, UltraTech Cement Middle East Investments Ltd (UCMEIL). The offer period will be open from May 28, 2024, to June 24, 2024. The estimated timeframe for finalising the acquisition is within 90 days from the date the offer is made, the company said in a release on Monday.

The acquisition boosted its share price, with UltraTech Cement shares rising by 1.36% to ₹10,302.20 apiece on the Bombay Stock Exchange (BSE), compared to the previous closing price of ₹10,225.95.

Through this acquisition, UltraTech aims to leverage its white cement manufacturing expertise to expand RAK Cement's business locally, regionally, and globally including providing modern products such as wall care putty and other new products, the company states in a release.

UltraTech Cement has a consolidated capacity of 138.39 MTPA of grey cement, with operations across 23 integrated manufacturing units, 29 grinding units, one clinkerisation unit, and eight bulk packaging terminals.

Recently, UltraTech Cement reported a 35.5% year-on-year (YoY) increase in consolidated net profit to ₹2,258 crore in the March quarter of FY24, up from ₹1,666 crore in the same period the previous year. From January to March FY24, the company’s revenue reached ₹20,418.94 crore, marking a 9.4% growth compared to ₹18,622.38 crore in the March quarter of the previous fiscal year. Domestic sales of grey cement rose 7% YoY to ₹17,716 crore, while exports of grey cement increased by 10% YoY to ₹675 crore.

Revenue from white cement grew 8% YoY to ₹715 crore, and ReadyMix Concrete (RMC) revenue surged 37% to ₹1,558 crore. The company’s EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) for the quarter was ₹4,250 crore, up from ₹3,444 crore in the same period last year.

Cement major’s consolidated net profit after tax (PAT) for the full year soared to ₹7,005 crore, marking a 38% surge from ₹5,064 crore in FY23. Simultaneously, the company experienced significant growth in net sales for FY24, totaling ₹69,810 crore, a notable 12% increase compared to ₹62,338 crore in FY23. EBITDA (earnings before interest, tax, depreciation, and amortisation) which reached ₹13,586 crore, showcasing a 22.4% upswing from ₹11,123 crore in the preceding year.