UltraTech Cement Ltd. share price snapped a five-day losing streak on Monday. It rose after it received an unconditional approval from the Competition Commission of India to acquire stakes in India Cements Ltd. UltraTech Cement announced late July that it will acquire 32.72% of share capital of Indian Cements from promoters, and members of promoter group.
UltraTech Cement's acquisition of 32.7% stake from promoter group and other shareholder will take its total holding in India Cements Ltd. to 55.5%. After the acquisition UltraTech Cement Ltd. would make an open offer for up to 26% additional equity, Citi Research said in a note.
Citi Research maintained its 'Buy' rating on the stock with a target price Rs 12,500 apiece, which implied a 9.3% upside from Friday's closing price.
The brokerage value UltraTech Cement at 20 times March EV/Ebitda given its potential pace of acceleration and ongoing consolidation. The share is re-rated up to 20 times one-year forward EV/Ebitda on consensus in 2015, when UltraTech Cement Ltd. delivered a capacity of CAGR of 20% between the period financial year 2012 and 2015. Citi Research's multiple is at premium to UltraTech Cement's 5-year trading average of 15.5 times.
UltraTech Cement share price rose 1.40% to the day's high of Rs 11,582.45 apiece, the highest level since Dec 20. It snapped a five-day declining streak. It lost 4.10% value in five days to Dec 20.
UltraTech Cement was trading 0.27% higher at Rs 11,451.30 apiece as of 10:49 a.m.
The stock gained 14.30% in 12 months and 9.05% on year to date basis. Total traded volume so far in the day stood at 0.12 times its 30-day average. The relative strength index was at 47.22.
Out of 41 analysts tracking the company, 31 maintain a 'buy' rating, seven recommend a 'hold,' and three suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 3.8%.
India Cements Ltd. share price rose 10.92% to Rs 376.20, the highest level since Sept 16. It pared gains to trade at Rs 365.55 apiece as of 10:54 a.m., as compared to 0.86% advance in the NSE Nifty 50 index.
The stock gained 39.90% in 12 months, and 41.37% on year to date basis. Total traded volume so far in the day stood at 40 times its 30-day average. The relative strength index was at 61.23.
Out of seven analysts tracking the company, one recommends a 'hold,' and six suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 8.1%.
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