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Mexico’s Cemex set to buy Murli Cement for $550 m

MEXICO’S Cemex SAB de CV, the world’s third-largest cement maker is close to buying the cement business of Nagpur-based Murli Industries for about $550 million. Cemex has made an offer of $550 million after several months of due diligence. However, the price is still being negotiated and the final figure would depend on the outlook for cement prices.

Murli Industries has a 3 million-tonne plant in Maharashtra’s Chandrapur and plans to build two more, one in Rajasthan and the other in Karnataka with capacities of 3 million tonnes each and would be built in tandem with 50 mw captive power plants. The deal values Murli Industries’ present cement capacity at an EV/tonne of US$ 180 which is at a huge premium to the replacement cost and also present valuation of large cement players. However, Mr. AM Chandak, chief financial officer of Murli Industries, declined to comment on the development. We believe the move is positive for small and mid size cement companies and could see positive reaction in the stock price of small & mid size cement companies.

LTP @ 77.5 on Friday 19/11/2010
VPS Advisory Services suggest to buy this stock @ MP which will show at least 10% growth.