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Shares of HeidelbergCement (India), the Indian arm of the German cement major, surged eight per cent on Friday on stake sale buzz.
Media reports suggest the cement maker is in talks with private equity firm Bain Capital to sell a minority stake of 12 per cent, at a premium of 80 per cent to the current market price. On the BSE, the stock closed the week at Rs 47.75, up 7.8 per cent before hitting an intra-day high of Rs 48.70 on Friday.
Heidelberg, in its filing to the stock exchanges, said, “We have high standards of corporate governance and have always kept a principle of not reacting to market speculation or rumours.” Attempts to reach the Heidelberg management were in vain.
Sector analysts told Business Standard, valuation of Rs 1,800 crore was a too high in the current market situation. When Bain Capital (as reports suggest) has already valued Heidelberg (India) at Rs 1,800 crore, why do they need two to three months to conduct due-diligence, they wondered. At on Friday’s closing price, HeidelbergCement (India) had a market cap of Rs 1,082 crore.
HeidelbergCement has an overall capacity of six million tonnes in India and the brand enjoys premium status in the central region of the country under the brand name ‘mycem’. Promoters hold 68.55 per cent stake in the company. During the January-March quarter, foreign institutional investors and domestic institutional investors raised their stakes by 49 basis points (bps) and 33 bps, respectively.
Analysts say, in the case of Jaiprakash Associates, which is trying to sell its Gujarat plant, valuation has been a stumbling block. Jaiprakash is looking for a price of around $170/tonne, which the buyers feel to be high, they add. Currently, average valuation in the Indian cement sector ranges between $130/tonne and $200/tonne (enterprise value per tonne).
