Birla's UltraTech buys stake in rival to defend Indian cement lead against Adani

A man cleans an Expert Testing Van of UltraTech Cement outside a cement store in Ahmedabad

By Hritam Mukherjee

BENGALURU (Reuters) -UltraTech Cement said it is buying a stake worth up to $228 million in rival India Cements, intensifying a battle with the Adani group which is challenging its position as the South Asian nation's top cement maker.

India's cement market, expected to roughly double to $49.24 billion by 2029 from 2022 levels, was long dominated by billionaire Kumar Mangalam Birla's company until Gautam Adani entered the sector in 2022 and quickly rose through the ranks to become the second biggest player.

The deal for a 23% stake, which UltraTech said is a non-controlling financial investment, comes as cement makers stand to benefit from Narendra Modi's return to power and an expected infrastructure spending spurt in Asia's No. 3 economy.

The investment in Chennai-based India Cements will help UltraTech guard its turf in the country's southern markets, at a time when Adani firms are attempting to boost their hold in the region.

Between November and June, UltraTech and Adani's Ambuja have added heft to their own southern holds by signing deals with Kesoram Industries and Penna Cement Industries respectively.

As of end-March, UltraTech had an 11% market share in the region, with the Adani group having a 6% share, an industry estimate showed.

"It is becoming clearer that larger incumbents are vying for a slice of the pie in South India," said Choice Broking's Ashutosh Murarka.

The Adani group was known for its aggressive expansion strategies across sectors, including deals at NDTV, Ambuja and ACC, before falling prey to a damning report from a U.S. short seller early last year.

The group has subsequently bounced back and has also resumed making acquisitions.

Broadcaster NDTV reported that UltraTech is buying the stake mainly from investor Radhakishan Damani and his associated entities, who together hold a 20.78% stake in India Cements.

UltraTech and Damani, who is also the founder of India's top retail chain DMart, did not immediately respond to Reuters' requests for comments.

India Cements' shares jumped 14% on Thursday after the news, while UltraTech's shares rose nearly 7% to hit a record high.

($1 = 83.5050 Indian rupees)

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Savio D'Souza and Muralikumar Anantharaman)