Global banking and wealth management group Investec on Wednesday launched a 'BUY' rating for Ambuja Cements with a target price of Rs 950 from Rs 577 apiece, which is an impressive 65.1 per cent return as projected.In a note, Investec wrote that it "finds comfort in management, reaffirming its growth goals, cost/synergy targets and on-going initiatives to achieve the same".
"Factoring growth pipeline, lease expires (Lease wins reveal the horse to ride on), promoter's economic interest in ACEM (Ambuja Cements), we prefer ACEM over ACC. We note consolidation, sustainability, ESG as key themes for the sector and believe ACEM is best placed to take the gains," Investec said. With focus on consolidation, streamlined operations, and massive production capacities, Ambuja Cement is cementing its place as a market leader, and a stronger future lies ahead for investors and stakeholders alike.
Ambuja Cements's board on Tuesday approved the merger of its recently acquired entities — Sandhi Industries Ltd. and Penna Cement Industries Ltd. — with itself through separate schemes of arrangement.
The Adani Group's cement major will issue 12 equity shares of face value of Rs 2 each for every 100 equity shares of Sanghi Industries of face value Rs 10.
The eligible shareholders of Sanghi Industries will become the shareholders of Ambuja Cements, according to an exchange filing. The transaction will be completed subject to necessary approvals in around 9-12 months, the company added.
Ambuja Cements has a 58.08 per cent stake in Sanghi Industries and wholly owns Penna Cement, the investment research platform of Investec said the move will "streamline organisational structure, simplify compliance requirements and do-away with RPTs (lated party transactions)."Sanghi Industries acquired by Ambuja in 2023 at an enterprise value of Rs 5,000 crore has a clinker capacity of 6.6 million tonnes per annum, cement capacity of 6.1 MTPA, and limestone reserves of one billion tonnes. Sanghipuram plant of Sanghi is India's largest single location cement and clinker unit by capacity with captive jetty and captive power plant."
The acquisition is expected to make Ambuja Cements more competitive and efficient, said Ajay Kapur, CEO, cement business of the Adani Group. The idea is to increase working capital management and internal funds for further growth in businesses.
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