Shares of a small-cap company involved in the manufacturing and sale of cement and clinker surged nearly 8 percent following UltraTech Cement’s acquisition of an 8.69 percent stake for Rs.851 crore.
Price Movement
In Friday’s trading session, Star Cement Ltd’s share price surged 7.5 percent, reaching an intraday high of Rs.247.30 per share from its previous close of Rs.230.00 apiece. The price has since retreated to Rs.236.18 per share. Over the past five years, the stock has delivered impressive returns of over 160 percent.
Rational for the rise
Star Cement Ltd has seen a significant development with the announcement of UltraTech Cement Ltd acquiring an 8.69 percent stake for Rs.851 crore. The deal involves the purchase of up to 3.7 crore equity shares at a price not exceeding Rs.235 per share, excluding taxes and other levies.
This move follows the decision of Star Cement’s promoters and promoter group entities to sell their equity holdings, prompting UltraTech’s strategic investment in a non-controlling minority stake.
Additionally, a large trade of 3.36 crore shares, amounting to 8.3 percent equity worth Rs.766 crore, was executed through the block deal window, leading to a surge in Star Cement’s share price by over seven percent.
Manufacturing Capacity
Star Cement, a prominent player in the Northeast cement market, currently operates with an installed capacity of 7.7 million tonnes per annum (mtpa). Its infrastructure includes an integrated plant in Meghalaya and four grinding units. The company has set a target to expand its production capacity to 25 mtpa by 2030.
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Financial Performance
Star Cement Ltd’s Q2 FY25 financial report disclosed net sales of Rs.641.55 crore, a 10 percent growth from Rs.585.26 crore in Q1 FY24. However, net profit dropped sharply by 86 percent to Rs.5.67 crore from Rs.40.67 crore in the corresponding period of the previous year, primarily due to higher depreciation and increased expenses.
Shareholding Pattern
As per the June 2024 shareholding pattern, the promoters of Star Cement Ltd hold a 66.47 percent stake, while Foreign Institutional Investors hold a 1.36 percent stake. Domestic Institutional Investors and Retail investors hold a stake of 4.96 percent and 27.20 percent, respectively in the company.
Company Overview
Star Cement Ltd. is a prominent cement manufacturer in India, recognized as the largest in Northeast India. Established in 2001, the company operates integrated plants in Meghalaya and additional units in Assam and West Bengal. It produces a range of cement products, including Ordinary Portland Cement and specialized Anti-Rust Cement.
Written by – Siddesh S Raskar
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