Block Deal Bonanza: How Pilani Investment's UltraTech Stake Sale Could Trigger 31% Dividend Yield

UltraTech Cement promoter entity Pilani Investment and Industries Corporation is expected to sell a 0.57% stake in the cement manufacturer via a block deal, people aware of the development told NDTV Profit.

The offer price for the block deal has been set at Rs 11,481 per share, indicating a discount of around 3% from the current market price. The total size of the block deal is estimated at around Rs 1,909 crore. Jefferies is acting as the banker to the transaction, sources said.

Based on shareholding data available on the BSE, Pilani Investment, an Aditya Birla Group owned company, currently holds a 1.5% stake in UltraTech Cement. 

ALSO READ: UltraTech Cement Block Deal: Promoter Pilani Investment To Sell Stake Worth Rs 1,909 Crore

What Does The Block Deal Mean?

Through this deal, Pilani Investments, a listed entity, is expected to realise one-time gain of Rs 1,909 crore, which is likely to be routed back to Birla Group via dividends. After tax, the disposable amount is estimated to be around Rs 1,527 crore, likely to  translate into a dividend per share of Rs 1,380, nearly 31.7% dividend yield, according to NDTV Profit Research data.

Public shareholders hold 41.3% stake in the company, of which 23.2% is held by MP Birla promoted enitities. Aditya Birla Group is expected to get nearly Rs 900 crore from this stake sale in UltraTech.

This stake sale comes months after Vodafone Idea approved allotment of 430 crore warrants to Birla Group at Rs 11 per share, which translated to a fund raise of Rs 4,730 crore. Around 25% of the fund infusion is already done. The fund received via stake sale could possibly be deployed in Vodafone Idea.

ALSO READ: Morgan Stanley Thinks That Cement Stocks May Have Weathered The Worst — Here's Why

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