The Hindu Business Line : ‘No hurry to sell stake in UltraTech Cement’

Chennai, Oct 11 Larsen & Toubro is not in a hurry to sell its stake in UltraTech Cement Ltd. L&T has about 11.30 per cent stake in the company, which was formed in 2004 after L&T decided to sell its cement business.

UltraTech is now a subsidiary of Grasim Industries Ltd, of the Aditya Birla group. Grasim and the Aditya Birla group together have a 53 per cent stake in UltraTech.

Mr A.M. Naik, Chairman and Managing Director, L&T, told Business Line here that L&T was still holding its stake because “it is my net worth reserve.”

“You always keep in a locker some money for some days when you need it. Now I don’t need it,” he said.

He was confident that UltraTech’s share price would go up, as cement companies’ shares would always do well.

“When it reaches a certain level of my expectation, we will see,” was his reply when asked as to how long L&T would keep the shares.

Mr Naik said the agreement with the Aditya Birla group provided for L&T to offer the shares first to them and if the Birlas did not want to pick it up at the prevailing market price, L&T was free to sell it in the market. UltraTech’s shares closed at Rs 1,086.90 today. UltraTech has a capacity of 17 million tonnes of cement.

To a question on L&T’s share prices recording significant increases, Mr Naik felt it had to do with the index itself having gone up.

He explained that when the Sensex (BSE index) was around 15,700, L&T’s shares touched Rs 2,742 for a brief while and settled at Rs 2,700 levels.

Subsequently, when the Sensex went up to 17,800 points – an over 13 per cent increase – L&T’s shares moved to Rs 2,800-2,850 levels, which was only a 5 per cent rise. This meant that the company’s shares still trailed the index.

He said that investors and analysts were figuring out that L&T’s shares had lagged the index and there was still room for catching up. Today, the shares closed at Rs 3,486.65, a 3.40 per cent increase over yesterday’s closing price.

More Stories on : Mergers & Acquisitions | Cement | Larsen & Toubro Ltd

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