Star Cement shares soar 14% on Adani acquisition buzz; key details

Shares of Star Cement Ltd climbed 14 per cent in Wednesday's trade after a media report suggested that the Adani group firm Ambuja Cements Ltd was looking to acquire the cement maker in a bid to expand its North East reach. Star Cement promoters owned 66.47 per cent stake in the cement maker as on September 30.

Star Cement is the largest manufacturer with the highest market share in the North East with an installed capacity of 7.7 mtpa, a Moneycontrol report said while suggesting that Star Cement is looking to hit 25 mtpa capacity by 2030.

Following the news, Star Cement shares climbed 13.66 per cent to hit a high of Rs 222.95 on BSE. With this, the stock is up 25 per cent in 2024 so far against a 12.05 per cent rise in the BSE Sensex. Star Cement later clarified the news item was speculative and the company is not engaged in any discussions with the Adani group in this regard. The stock cut gains, and was later trading at Rs 206.55, still up 5.30 per cent.

"We have always made and will continue to make disclosures in compliance with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," Star Cement said.

The company is always evaluating options for growth opportunities, an Adani Group spokesperson told Moneycontrol.

As per the report, the Adani group has appointed consultancy firm EY for evaluating the deal. Earlier this week, Goldman Sachs said FY25 is likely be one of the weakest years for the cement sector profitability in the recent past. It expects FY26 to be only slightly better. Consolidation of market share, capacity and resources will sustain premium valuations for the large players, it said.

Goldman Sachs said with larger players adding significant capacity over the next 12-18 months, and consolidators looking to ramp up utilisations of the acquired assets, the fight for volume share is likely to continue in Calendar 2025, which could keep pricing and therefore profitability improvement in check despite the cost tailwinds and demand pick-up.

In case of Star Cement, , Elara Securities last month said that the company's earnings will be an oasis in the cement industry that has been struggling with intense competition and surplus.

It said the company is well placed to report healthy performance from hereon, led by healthy volume growth due to ramp-up of recently added capacity and completion of ongoing growth projects, higher accrual of GST benefits from Q4FY25, access to low-cost renewable power and no major capacity addition in its core market in the next year. It also sees margin benefit from operating leverage and 5) absence of clinker purchase due to stabilisation of clinker unit from Q4FY25.