Shares of Ambuja Cement surged nearly 11 percent to hit its all-time high on Monday after Adani Group completed the acquisition of the cement major and its subsidiary ACC last week. The sentiment was also lifted on reports that Adani Group also plans to infuse ₹20,000 crore into the firm to accelerate growth.
Ambuja Cement surged as much as 10.8 percent in intra-day deals to its record high of ₹572.25 while ACC rose as much as 4 percent to its day's high of ₹2721.35 per share. Ambuja ended the day 9.3 percent higher at ₹564.40 per share while ACC pared gains to settle 1 percent higher at ₹2,641.
Adani Group has bought Swiss major Holcim’s stake in Ambuja Cements for $6.4 billion. The combined market capitalization of Ambuja Cements and ACC is $19 billion as on date. With this acquisition, Adani is now India's second largest cement manufacturer.
The new promoters also plan to infuse ₹20,000 crore more in Ambuja Cements through preferential allotment of warrants. This will equip Ambuja to capture growth in the market. The actions will significantly accelerate value creation for all stakeholders, in line with the Adani Group's business philosophy, say analysts.
Ambuja Cements has sought approval for allotment of preferential allotment of 47.74 crore warrants at a price band of ₹418.87 to Harmonia Trade and Investment Ltd, a promoter group entity, totalling ₹20,001 crore in one or more tranches.
The boards of Ambuja Cements and its subsidiary, ACC, were reconstituted on Friday. Gautam Adani took over as chairman of Ambuja Cements’ board, while his elder son Karan was appointed chairman and non-executive director at ACC. Karan will also be a non-executive director at Ambuja Cements.
"What makes cement an exciting business is the headroom for growth in India, which exceeds that of every other country well beyond 2050," said Gautam Adani, Chairman, Adani Group.
The chairman believes the Group is on track to become the largest and most efficient manufacturer of cement by no later than 2030.
Meanwhile, commenting on this acquisition, global brokerage JP Morgan stated that Ambuja would become a more cash-rich company in the Indian cement sector after warrant issuance. The emergence of cash-rich Ambuja Cement with aggressive new owners is negative for peers, it added.
It has an underweight rating to the stock, with a reduced target of ₹309 apiece and a neutral call on ACC with ₹2,110 per share target.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.