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India's Ambuja Cements said on Thursday it has bought a 56.74% stake in smaller rival Sanghi Industries at an enterprise value of 50 billion rupees ($604.4 million), closing the Adani Group's gap on market leader UltraTech at a time of booming demand for building materials.

The deal is the billionaire Gautam Adani-led conglomerate's first major acquisition this year after a report by short-seller Hindenburg Research in January slammed the group shares and led to investigations into the group.

Ambuja will acquire a 56.74% stake in Sanghi for 16.74 billion rupees ($202.4 million), and launch an open offer for a further 26% stake at 114.22 rupees per share, a 13.8% premium to Sanghi Industries stock closing price on Wednesday.

Adani Group bought Holcim AG's cement businesses in India last year – Ambuja Cements and ACC Ltd – for over $10 billion in its largest-ever acquisition.

With the Sanghi Industries acquisition, Ambuja Cements' capacity will increase to 73.6 MTPA, the company said in a regulatory filing.

There has been strong demand for cement in India as the government has increased its infrastructure projects and due to the strong demand for residential houses, albeit in the luxury sector. The cement sector grew 9.4% in June.

Ambuja has posted a 29% rise in its April to June-quarter profit, excluding dividend income, boosted by demand for its premium cement products.

($1 = 82.7200 Indian rupees)