UltraTech Cement to Sell 7% Stake in India Cements | SEBI Norm Explained

SEBI Orders UltraTech Cement to Sell 7% Stake in India Cements; India Cements Eyes Strong EBITDA Growth

In a dramatic turn of events, UltraTech Cement – part of the Aditya Birla Group – has been directed by SEBI to divest approximately 7% of its stake in India Cements, amounting to over ₹667 crore, to comply with public shareholding norms. Simultaneously, India Cements is showing early signs of recovery under new leadership, forecasting surging EBITDA (earnings before interest, taxes, depreciation, and amortisation) over the coming years.

📌 Why UltraTech Must Sell 7% of India Cements

SEBI mandates publicly listed companies must hold at least 25% public shareholding. After UltraTech’s open offer—oversubscribed by investors—its stake in India Cements surged to around 82%. As a result, UltraTech is required to divest roughly 7% to align with regulations :contentReference[oaicite:4]{index=4}.

The divestment value is estimated at >₹667 crore, based on the current market price of ~₹333 per share. India Cements has until February 3, 2026—12 months post-open offer closure (February 4, 2025)—to restore public shareholding to at least 25% :contentReference[oaicite:5]{index=5}.

🔄 How the Stake Reduction May Occur

• Secondary market share sales
• Preferential allotments targeting public investors
• Rights issue (with UltraTech foregoing its entitlement)
• Bonus issue (same waiver by UltraTech)

UltraTech confirmed its compliance intent, stating they “will ensure compliance within the stipulated timeline” :contentReference[oaicite:6]{index=6}.

💡 Strategic Acquisition: UltraTech’s Southern Push

In December 2024, UltraTech acquired India Cements in a two-stage acquisition:

• June 2024: 22.77% stake from Damani group at ~₹268/share
• July 2024: 32.72% promoters' stake at ₹390/share, triggering the open offer :contentReference[oaicite:7]{index=7}

This brought their total to ~55%, and post-open offer (subscribed fully), it surged to nearly 82%—making India Cements a fully consolidated subsidiary :contentReference[oaicite:8]{index=8}.

📈 India Cements Snaps Back to Profitability

Despite prior losses, India Cements has now reached EBITDA break-even just one quarter after acquisition, marking a significant turnaround :contentReference[oaicite:9]{index=9}.

Notable operational highlights:

• 📦 Over 1 million metric tons sold in March 2025—“a second case of sweet success,” CFO Atul Daga remarked :contentReference[oaicite:10]{index=10}.
• 📍 Cement pricing firmed up across South India starting April, aiding margin expansion :contentReference[oaicite:11]{index=11}.

📊 EBITDA Growth: ₹500 to ₹1,000+/ton by FY27

UltraTech’s guidance for the subsidiary is bullish:

Financial Year	Targeted EBITDA/ton
FY26	₹500+
FY27	₹800
FY28 onwards	₹1,000+

This forecast is grounded in:

• Price recovery across South India
• Operational efficiency via ~₹1,500 crore spend on waste heat recovery and alternate fuels :contentReference[oaicite:12]{index=12}
• Tolling and brownfield expansion strategies :contentReference[oaicite:13]{index=13}

💰 UltraTech Overall Q4 FY25 Strength

The broader business also shows strong momentum:

• 📈 10% volume growth in Q4 FY25 (41 million tonnes) :contentReference[oaicite:14]{index=14}
• 💵 Consolidated net profit +9.9% YoY at ₹2,482 crore; revenue ₹23,063 crore :contentReference[oaicite:15]{index=15}
• 🔻 Net debt/EBITDA at 1.16x, with a target to 0.5x :contentReference[oaicite:16]{index=16}

🌍 Industry Context: Consolidation & Compliance

UltraTech isn’t alone. FY25 saw multiple promoters—including Sanghi Industries (Adani), Aditya Birla Sun Life AMC, Bikaji Foods, and Cello World—reduce holdings from >75% to meet SEBI’s public float rules :contentReference[oaicite:17]{index=17}.

Separately, UltraTech reaffirmed it has no plans to delist India Cements, maintaining its public listing :contentReference[oaicite:18]{index=18}.

📉 Share Price & Investor Implications

The mandated divestment could temporarily pressure India Cements' stock, especially if UltraTech sells in large blocks. But underlying strength—profit turnaround, efficiency investments, and long-term margin potential—makes ICEM a compelling turnaround play.

Retail and institutional investors should monitor:

• UltraTech’s divestment mode (market sale vs rights issue)
• India Cements’ quarterly EBITDA and volume trends in FY26
• Price stability in South India’s construction market

🔍 Final Take: Headwinds & Tailwinds

Short‑term: Regulatory pressure and share sale may introduce volatility.
Long‑term: Operational turnaround, strategic support from UltraTech, and robust financial planning bode well.

With SEBI compliance on track and fundamental improvements underway, both UltraTech and India Cements look positioned for sustainable growth.

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• South India cement prices
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• EBITDA ₹500 per ton FY26

Note: This is for informational purposes only; not investment advice.