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India Cements Ltd. has entered into a share purchase agreement with JSW Cement to divest its entire stake in Springway Mining Pvt. Ltd., a wholly-owned subsidiary, the company said in an exchange filing.

The total consideration for the deal will be Rs 604 crore, according to a Motilal Oswal note.

India Cements will receive Rs 127 crore towards the advances paid, besides the Rs 374 crore it has already received from JSW Cement. The balance Rs 103 crore will be released on or before December 31, 2022 upon completion of certain conditions in the share purchase agreement.

Springway Mining owns limestone bearing land in the Panna District of Madhya Pradesh and is also in the process of setting up a cement plant in the Damoh district of the state.

In Monday's dealing room check, CNBC-TV18 had highlighted that the street is anticipating a potential corporate development for India Cements with regards to its debt reduction.

CNBC Awaaz had earlier reported that Ultratech Cement was the front runner to acquire this project while talks were also ongoing with JSW Cement, the Adani Group and other players. The proceeds were supposed to be used by India Cements to pare its long-term debt, which stood in excess of Rs 3,000 crore.

Motilal Oswal believes that expectations of consolidation in the cement sector has led to an upside in the stock, despite significant earnings pressure. It also finds the company's current valuations unattractive and has therefore reiterated its sell rating on the stock, with a price target of Rs 180.

Shares of India Cements fell as much as 4.6 percent in early trade to Rs 256.15.

First Published:Oct 10, 2022 6:21 PM IST