UltraTech Cement says it will buy a 23 per cent stake in Chennai-based rival The India Cements for up to INR18.85bn (US$226m), closing the gap on India's Adani Group.

The decision was approved by UltraTech's Board of Directors during a meeting held on 27 June 2024. The investment, which is purely financial and not a related party transaction, is expected to help UltraTech retain a strong presence in the southern part of the country, as Adani firms are attempting to boost its hold in the region and narrow the gap with the market leader. The deal comes as cement makers stand to benefit from Narendra Modi's return to power, which is expected to spur infrastructure spending.

Aditya Birla group-owned UltraTech had dominated the cement market in India until the Adani Group entered the sector in 2022 and quickly rose through the ranks. "It is becoming clearer that larger incumbents are vying for a slice of the pie in South India," said Ashutosh Murarka, a research analyst at Choice Broking. "The stake deal intensifies the rivalry between UltraTech and its smaller peer Adani group across the country and definitely disadvantages regional peers," he added.

As of March, UltraTech had an 11 per cent market share in the southern Indian cement market, after it bought Kesoram Industries' cement business for US$645m last year, reports Reuters.