Why did Kesoram Industries stock hit 20% upper circuit today?

SYNOPSIS: Frontier Warehousing gains control of Kesoram Industries through a major stake purchase following its cement business demerger, ending Birla family ownership and leaving Kesoram focused on its rayon, paper, and chemicals operations.

During Monday’s morning trading session, shares of a B K Birla group company involved in the manufacturing of rayon, transparent paper & chemicals hit a 20 percent upper circuit on the stock exchanges. What triggered this significant jump? Let’s explore the details in this article.

With a market cap of Rs. 243 crores, shares of Kesoram Industries Limited hit a 20 percent upper circuit at Rs. 7.82 on BSE, as against its previous closing price of Rs. 6.52. The stock has delivered negative returns of more than 27 percent in one year, but has gained by nearly 54 percent in the last one month.

What’s the News:

The stock reacted to Friday’s block deal after Frontier Warehousing Limited initiated steps to acquire a controlling stake in Kesoram Industries Limited, following the formal separation of its cement business. This development marks a pivotal transition for Kesoram Industries, as Frontier Warehousing assumes ownership, bringing an end to the Birla family’s long-standing association with the company.

Frontier Warehousing has launched an open offer to acquire 8.07 crore shares, representing 26 percent of Kesoram’s equity, at Rs. 5.48 per share. This offer follows a share purchase agreement under which the acquirer will purchase 13,29,69,279 shares from Birla-controlled promoter group entities at Rs. 4 per share. The combined transaction, valued at ~Rs. 53.2 crore, covers 42.8 percent of the company’s voting share capital and results in the transfer of effective control to Frontier Warehousing.

This change in ownership comes on the heels of Kesoram’s decision to carve out and transfer its cement business to UltraTech Cement earlier this year, completing a major restructuring exercise. UltraTech completed the absorption of the cement division under a 1:52 share swap ratio, with the demerger scheme becoming effective on 1st March 2025. With the cement operations now divested, Kesoram will focus solely on its remaining non-cement businesses.

Post-demerger, Kesoram discontinued standalone manufacturing activities and now operates through its wholly owned subsidiary, Cygnet Industries, which manages its rayon, transparent paper, and chemicals divisions. Meanwhile, the company’s spun pipes and foundries facility in Bansberia, Hooghly, remains permanently closed or under suspension, and its rayon plant continues to operate in the same district.

Kesoram Industries reported a marginal decline in revenue from operations, experiencing a year-on-year decrease of around 7 percent, from Rs. 59 crores in Q2 FY25 to Rs. 55 crores in Q2 FY26. However, profitability showed notable improvement during the same period, as the company’s net loss narrowed significantly, from Rs. 70 crore to Rs. 26 crore, indicating a 63 percent YoY reduction in losses.

Written by Shivani Singh

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