Kesoram Industries hits upper circuit for 5th consecutive days after demerger of cement biz

Kesoram Industries stock price rallied for the fifth consecutive day after the company demerged its cement division into UltraTech Cement.

At 12:06 PM, the stock was trading at Rs 153.65 per share on NSE, up Rs 7.30 or 5 percent.

It will be at an enterprise value of a little over Rs 7,600 crore, which includes the debt on Kesoram Industries’ book of around Rs 1,700 crore.

According to sources, shareholders of Kesoram Industries will receive one share of UltraTech Cement for every 52 shares they currently hold.

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The demerger and merger will help Kesoram Industries in deleveraging the balance sheet, It will help reduction of debt and outflow of interest, and unlock the value in the cement business.

Under the proposed deal, UltraTech will issue 59,74,301 new equity shares to the shareholders of Kesoram Industries. This will increase UltraTech’s equity capital to Rs. 294.66 crore consisting of 29.47 crore equity shares of Rs 10 each.

The cement business of Kesoram Industries includes two integrated cement units at Sedam (Karnataka) and Basantnagar (Telangana) with a total capacity of 10.75 mtpa (million tonne per annum). 

In the September-ended quarter (Q2FY24), Kesoram Industries’ sales jumped by 13 percent year-on-year (YoY). Net loss narrowed to Rs 58 crore from R 59 crore in the year-ago period.

The stock has generated a breakout above the January 2018 high signalling strength and continuation of the current up move. The stock has surpassed the 23.6 percent retracement level of the entire decline since 2007.

Among the oscillators, the weekly MACD remains consistently above its nine-period average, affirming a positive bias in the stock.

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