Shares of UltraTech Cement have dipped 3.4% to Rs 3,721 per share, extending their 6.5% fall on the BSE in the past four days. UltraTech Cement has announced on Sunday that it will be acquiring the cement business of Century Textiles in a share swap deal. UltraTech Cement will issue one equity share for 8 of Century Textiles. Total shares of around 14 million would be issued, which will result in equity dilution of around 5% against capacity increase of 14.5%.
“In the near term, the deal will depress UltarTech Cement margin, as its EBITDA (earnings before interest, tax, depreciation and amortisation) per tonne is Rs 970 in FY18 vs Century Textiles’ Rs 445 (blended, including clinker volume). Our analysis indicates the deal could add Rs 5.5 to EPS by FY21E, i.e., the second year after completion of acquisition (we assume savings of 10% in fixed cost, 6% reduction in freight cost, reduction in cost of debt by 75bp and transfer fees of Rs 64 per tonne with a volume CAGR of 7% over FY18-21E),” analysts at Elara Capital said in company update. The brokerage upgrades ‘buy’ rating on the stock with 12 month target price of Rs 4,989.
Shares of have slipped 7.5% to Rs 778 per share, also their fresh 52-week low on the BSE in early morning trade, after the company reported a lower than expected year-on-year growth of 5.3% in net profit at Rs 1.05 billion in March quarter owing to sharp decline in margins and marginally lower volume growth. Operational revenue grew 11.7% at Rs 6.44 billion over the previous year quarter. Analysts on an average had expected profit of Rs 1.26 billion on revenue of Rs 9.72 billion of the quarter.
Vakrangee locked in lower circuit for the 20th straight trading days, down 5% at Rs 46.55 on the BSE. A combined around 50,000 shares have changed hands and there were pending sell orders for 94.11 million shares on the BSE and NSE. The stock tanked 91% from its 52-week high of Rs 515 recorded on January 24, 2018 in intra-day trade.