Ambuja Cements share price jumps 3% as Penna Cement acquisition seem value accretive; analysts bullish on Adani firm
₹10,422 crore. Ambuja Cements shares rallied as much as 3.86% to a fresh high of ₹690.00 apiece on the BSE.
Ambuja Cements will acquire 100% shares of PCIL from its existing promoter group, Pratap Reddy and family and the acquisition will be fully funded through internal accruals, the Adani Group cement manufacturer said in a regulatory filing on Thursday.PCIL has 14 MTPA cement capacity, of which 10 MTPA is operational, and the remaining is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months. Further, surplus clinker at the Jodhpur plant will support an additional 3 MTPA cement grinding capacity over and above 14 MTPA, it added.
Read here: Ambuja Cements' acquisition of Penna Cement for ₹10,422 crore raises Adani's cement market share by 8%With the company securing a foothold in the southern market, analysts believe the expansion bodes well for its growth ambition and the deal to be value accretive for Ambuja Cements. Analysts have maintained their bullish stance for Ambuja Cements shares.As per calculations by Dharmesh Shah, Research Analyst at Emkay Global Financial Services, the deal is pegged at a favorable valuation of $89 per tonne, which may decline to $79 per tonne with potential grinding capacity addition of 3 mt.
“Besides, the acquisition would improve Ambuja’s market share by ~200 bps pan-India and by 800 bps in the South. Along with its ongoing expansion plans, the company targets increasing capacity to ~113 mt by FY27 as well as accelerating growth to achieve its target of 140 mt by FY28," Shah said.
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