Emami Group is in talks with Ultratech Cement

The stock of Emami Limited dipped more than 5 per cent on Thursday as the market was buzzing that the Emami Group is in exploratory talks with Ultratech Cement and private equity funds to sell stakes in its cement business, valuing it at Rs. 5,000-5,500 crore.

For the stock of Emami Limited, divestment of non-core assets is sentimentally positive as the group will not require to dilute its stake further in the company. Emami Cement currently has three cement manufacturing assets with a capacity of 5.6 million tonnes. Depending on the valuation of the sale, if the assets are acquired by Ultratech it will help it in the long-term while increasing debt in the near-term.

Earlier this week, the promoters of Emami Group had undertaken a stake sale of 10 per cent in Emami Limited for raising Rs. 1230 crore which would be mainly utilise for debt reduction at the promoter level. The promoters’ stake has dropped to 52.73 per cent post this sale. The promoters’ stake had already decreased in March 2019 ended quarter to 62.74 per cent from 72.74 per cent in December 2018 ended quarter.

On Thursday, the stock of Emami which opened at Rs. 321.00 as against previous close of Rs. 317.95. It experienced selling pressure and witnessed nearly 5.5 per cent fall to touch intra-day low of Rs. 300.65. The stock settled for the day at Rs. 302.5 apiece, down by 4.9 per cent.