Dalmia Bharat falls over 5% after acquisition of Jaypee’s cement assets

Shares of Dalmia Bharat fell over 5% to Rs 1,807 in Tuesday’s intraday trade after Dalmia Cement, a wholly-owned subsidiary of Dalmia Bharat, entered into a binding framework agreement for the acquisition of clinker, cement and power plants of Jaiprakash Associates.

“Dalmia Cement has entered into an agreement to acquire the cement, clinker and power plants of Jaiprakash Associates having a total cement capacity of 9.4 million tonnes (along with a clinker capacity of 6.7 million tonne and thermal power plants of 280MW) at an enterprise value of Rs 5,666 crore. These assets are situated in the states of Madhya Pradesh, Uttar Pradesh & Chhattisgarh,” Dalmia Bharat said in a BSE filing.

The transaction is subject to due diligence, requisite approvals from lenders/JV partner of Jaiprakash Associates and regulatory authorities.

At 10.17 am, the stock was trading 3.6% lower at Rs 1,837. While shares of Jaiprakash Associates were trading 3.4% lower at Rs 11.34.

Following the development, brokerage firm Jefferies said, "If the acquisition fructifies, it will enable Dalmia to expand its footprint into the Central Region and add one more region to its vision of emerging as a pan India cement player. Deal timelines, additional required capex, limestone reserves are key for the company.”

Jefferies has a buy rating on Dalmia Bharat with a target price of Rs 2,060, which suggests an upside of 13% from the current market price of Rs 1,823 per share.

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