India's No.1 Cement Company UltraTech sees 5% Decline in Shares

Following the company's announcement of its entry into the wires and cables industry, Ultratech Cement's shares fell as much as 5% to Rs. 10,415.90 per on the NSE in the initial trading.

As part of its aspirations to increase its presence in the building value chain, UltraTech Cement said that it would invest Rs. 1,800 crore to establish a factory in Gujarat over the course of the next two years. The project is anticipated to be put into service by December 2026 and will be located close to Bharuch, Gujarat.

The plan to increase the Aditya Birla Group company's presence in the construction value chain through its Building Products Division was approved by the board on Tuesday.

The Aditya Birla Group introduced the Birla Opus brand last year, marking their entry into the decorative paints market.

According to the report, the wires and cables business saw revenue CAGR of around 13% between FY19 and FY24. With the shift from the unorganized to the organized market, the outlook is still positive, offering a new, reliable player in the market an alluring opportunity.

Experts and market participants expressed concern about the company's choice to join the new segment, which led to selling pressure on the company's shares. In the cement industry, Ultratech Cement is a well-known and large company that has continuously maintained its profitability and domination.

Additionally, the corporation introduced the Birla Opus brand last year, marking its first into the paint industry. Because its current companies are performing well, the Street is therefore concerned about the capital allocation to the new segment. According to a group of experts, expanding into too many markets could have a detrimental effect on the business.

Regarding this UltraTech Cement says, “This is in accordance with the "company’s strategy to strengthen its position as a comprehensive building solutions provider.

"The company aims to meet the growing demand for wires and cables across various sectors, including residential, commercial, infrastructure, and industrial applications”, it added.