Infrastructure company Jaiprakash Associates Ltd surged as much as 36.26 per cent to a six-month high of Rs 12.40 in morning deals on Tuesday.
UltraTech Cement rose as much as 1.6 per cent.
At 11.55 am, Jaiprakash shares were trading higher by 24.78 per cent or Rs 2.25 at Rs 11.33. UltraTech Cement had pared its gains and were down 0.32 per cent or Rs 10.75 at Rs 3,400.
Jaiprakash's board has approved the deal to sell cement plants to UltraTech at Rs 16,189 crore ($2.40 billion), slightly higher than the previous bid of Rs 15,900 crore, that was made in February.
Neither Jaiprakash nor UltraTech disclosed the rationale behind the increase in deal value.
Kotak said the deal was earnings-dilutive in initial years, but said it was a good long-term asset.
The deal would raise UltraTech's installed annual capacity by one-third to about 91 million tonnes, and provide Jaiprakash with much-needed relief to pare its debts.