Kesoram Industries hits 20%UC

Kesoram Industries is currently the top gainer on the BSE, locked at its 20% upper circuit after a change-of-control open offer from Frontier Warehousing triggered a sharp re-rating of the tiny post-demerger entity.

The stock jumped from a previous close of Rs 5.44 to Rs 6.52, its upper price band and also the 52-week high for the day’s revised band, on volumes of about 52 lakh shares versus a two-week average of under 4 lakh, lifting market capitalisation to roughly Rs 200 crore.

The move follows Frontier Warehousing’s agreement, via a share purchase agreement dated December 4, 2025, to acquire 13.30 crore shares, or 42.80% of Kesoram’s voting capital, from a clutch of Birla group promoter entities at Rs 4 per share for a consideration of about Rs 53.2 crore.

This triggers a mandatory open offer for up to 8.08 crore shares (26% of voting capital) at Rs 5.48 per share, implying a maximum outlay of about Rs 442 crore if fully subscribed. With the stock now trading nearly 19% above the open-offer price, the offer functions more as a floor and a control transaction than a straightforward arbitrage opportunity, and signals a meaningful shift in ownership away from the B K Birla group to the Kolkata-based logistics and warehousing acquirer.

Context is critical: during FY25 Kesoram completed the demerger and transfer of its cement business to UltraTech Cement, recording a one-time gain of about Rs 5,676 crore and a reported standalone profit of Rs 5,432 crore. Post-transaction, the company has ceased standalone manufacturing and is essentially a holding vehicle for the rayon, transparent paper and chemicals operations housed in loss-making subsidiary Cygnet Industries. The eye-catching TTM EPS of over Rs 170 and a headline PE of 0.04, reflected on BSE market data screens, are almost entirely driven by this exceptional gain and mask an underlying business that still posted a loss before tax of about Rs 225 crore from continuing operations in FY25.

For investors, the Frontier deal effectively hands control of a de-leveraged but tiny and challenged speciality-materials platform to a new sponsor with fresh capital and optionality. The open-offer document states that Frontier does not currently intend to delist the company, suggesting the listed shell and its Cygnet stake could be used to pursue a turnaround in sustainable packaging or potentially bolt-on assets in warehousing-adjacent businesses over time.

Near-term share price strength reflects this control premium and “option value” after a 97% collapse from pre-demerger levels, rather than any proven earnings revival; the key watchpoints now will be Frontier’s post-acquisition strategy for Cygnet, the pace at which the core operations can stem losses, and whether any future restructuring delivers substance to a stock that has suddenly moved from deep distress to speculative re-rating territory.