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

Last week, the Competition Commission of India (CCI) approved Adani Group's acquisition of Ambuja Cements and ACC from Switzerland's Holcim.

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.