Ambuja Cements surges 10% in one week; stock inches towards 52-week high

Shares of Ambuja Cements hit a nine-month high of Rs 425.25 on gaining 4 per cent on the BSE in Friday’s intra-day trade. The stock was trading at its highest level since November 2021. It inched towards its 52-week high of Rs 443 touched on September 8, 2021.

In the past one week, the stock of the cement major appreciated by 10 per cent after the Competition Commission of India (CCI) approved Adani Group’s acquisition of Ambuja Cements and ACC from Switzerland’s Holcim. In comparison, the S&P BSE Sensex was up less than 1 per cent during the week.

At 01:04 pm; Ambjua Cements was up 3 per cent at Rs 423.70, while ACC was trading 1 per cent higher at Rs 2,349 as against a 0.9 per cent decline in the benchmark index.

The competition watchdog on August 12 said the approval was granted to Endeavour Trade and Investment, which is a special purpose vehicle (SPV), set up in Mauritius and controlled by the Adani family.

Ambuja Cements and ACC were acquired in a $10.5-billion (Rs 81,339 crore) transaction in May, making Adani the second-largest cement player in India after Ultratech.

The Adani group had made an open offer at Rs 385 per share for Ambuja Cements and Rs 2,300 per share for ACC. As on June 2022, Holcim held 63.2 per cent stake in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent was held through Ambuja Cements).

Meanwhile, in the past six months, Ambuja Cements (23 per cent) and ACC (up 7 per cent) have outperformed the S&P BSE Sensex, which has gained 3 per cent.

“With India’s cement consumption at just 242 kg per capita, as compared to the global average of 525 kg per capita, there is significant potential for the growth of the cement sector in India. The tailwinds of rapid urbanization, the growing middle class and affordable housing together with the post-pandemic recovery in construction and other infrastructure sectors are expected to continue driving the growth of the cement sector over the next several decades”, Gautam Adani, Chairman of the Adani Group had said on May 15, 2022.

Both Ambuja and ACC will benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani portfolio companies have vast experience and deep expertise. This will enable higher margins and return on capital employed for the two companies. The duo will also benefit from Adani’s focus on ESG, circular economy and capital management philosophy, Gautam Adani had said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor