UltraTech surges after talks with R Infra for cement unit purchase

The shares of Aditya Birla Group's cement company UltraTech Cement surged on Friday with the news of its talks with Reliance Infrastructure (R-Infra) for stake purchase in its cement units.

UltraTech cement which is already one of India's largest cement companies has expressed its desire to expand its capacity from 69 million tonnes to 100 million tonnes by 2020. So this takeover will help them strategically as R Infra has a combined capacity of 5.8 million tonnes. They also acquired the Jaypee group cement unit some time back.

R Infra put up its cement unit for sale last month. It is looking to cut down its debt of Rs.25,766 crores through this deal. According to media sources the enterprise valuation is likely to fetch Rs.5000-5500 crores. The company is also engaging in Defence by acquiring Pipavav Defence.

In terms of financials the total operating revenue of UltraTech on year ending March 2015 stands at Rs.24348.96 crores an increase of 12.45 percent on yearly basis. The EBITDA of the company is at Rs. 4425.48 crores an increase of 9.68 percent and the EBITDA margin is 18.18 percent as compared to 18.63 percent for the same period last year showing good operational efficiency. The net profit of the company stands at Rs.2098.34 crores, a decrease of 4.88 percent. Last year the decrease was 17.62 percent. The decrease in net profit is mainly because of deferred taxes.

The stock of the company is trading at Rs.2833 an increase of 0.74 percent from the previous close.

UltraTech Cement Limited is an India-based company, which is engaged in the business of cement and cement related products. The Company manufactures a range of products that caters to construction needs, which include ordinary portland cement (OPC), portland blast furnace slag cement (PSC), portland pozzolana cement (PPC), white cement and white cement based products, ready mix concrete, building products and jointing mortars, as well as a host of others in retail formats.