(Bloomberg) -- UltraTech Cement Ltd. bought a 23% stake in India Cements Ltd. for about $226 million, as billionaire Kumar Mangalam Birla’s conglomerate looks to counter Adani Group’s buying spree amid an intensifying battle to dominate the sector.

Sector leader UltraTech will pay an average price of 267.74 rupees a share — a small premium to the stock’s closing price on Wednesday —  to buy 70.6 million shares of the Chennai-based cement maker, it said in an exchange filing. “This non-controlling financial investment constitutes around 23%” stake in the cement maker, the filing added.

Billionaire Radhakishan Damani, his family members and associates were the sellers, a separate filing showed. They sold almost their entire stake in the company.

Shares of UltraTech rose 5.2% to a record in Mumbai on Thursday while India Cements surged 11.7%. The transaction will make the Aditya Birla Group firm the second-largest shareholder in India Cements, trailing only the founders, who own 28.5%.

The stake gives UltraTech a solid foothold in a cement maker that’s already a sizable player in southern India — a geography where Gautam Adani’s conglomerate recently expanded its presence. Adani’s Ambuja Cements Ltd. announced the acquisition of Penna Cement Industries Ltd. in a $1.2 billion deal earlier this month.

UltraTech said in a separate filing Thursday that it had acquired 60.2 million shares — or a 19.44% stake — in India Cements, and that the remaining 3.4% will be acquired at a higher price of up to 285 rupees per share.

ICRA Ltd., local arm of rating agency Moody’s, said in a note dated June 13 that it “expects M&A deals to continue, given the aggressive growth plans of the large incumbent players who want to maintain their market share.” Asset block of 28 million tons is in the pipeline for acquisition in India, the note added.

Adani Group became India’s second-largest cement maker in 2022 after buying Ambuja and ACC Ltd. and has continued snapping up smaller firms since. 

UltraTech, the biggest cement maker, has an annual capacity of 152.7 million tons and is targeting 200 million ton by March 2027. The Adani group, on the other hand, has a capacity of 89 million tons and is targeting 140 million tons by 2028.

Cement is a key raw material in all infrastructure projects, making it a crucial resource for achieving Indian Prime Minister Narendra Modi’s goal to modernize the country and meeting the growing demand for homes in the world’s most-populous country.

In April, UltraTech said it will buy India Cements’ grinding unit for 3.15 billion rupees. 

--With assistance from Subramaniam Sharma, Anirban Nag and Abhishek Shanker.

(Updates to add seller details in third paragraph.)

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