Ambuja, ACC – Cement stock rises 9% after news of brokerage acquisition

Focus Cement Stock: Shares of most cement companies, with the exception of Ultratech Cement and Shree Cement, rose as much as 9 percent on the BSE intraday on Monday after Adani Group announced the acquisition of a controlling stake in Ambuja Cements and ACC Limited for 10.5 billion on Sunday.

Separately, Ambuja Cement jumped 3.5 per cent to Rs 371.4 per share, while shares of ACC Ltd rose more than 7 per cent to Rs 2,265 per share on the BSE intraday. In contrast, heavyweight shares such as Ultratech and Shree Cement fell 6 percent and about 4 percent, respectively.

In the broader market, shares of almost all cement companies rose, as India Cement rose the most at 9 per cent, followed by Mangalam Cement at more than 7.5 per cent. Although JK Lakshmi Cement, Dalmia India, and Ramco Cement each rose about 3, 2 and 1.5 per cent intraday today.

Adani Group has announced that it has entered into a specific agreement to acquire a wholesome stake in Ambuja Cements Limited and ACC Limited’s Switzerland-based Holcim Limited through an offshore special purpose vehicle.

The Holcim stake and open offer consideration for Ambuja Cements and ACC is worth $ 10.5 billion, making it the largest acquisition by Adani and the largest ever M&A transaction in India in terms of infrastructure and materials.

Domestic brokerage firm Philip Capital is bullish for both Amubja and ACC, keeping estimates unchanged for both stocks and upgrading the target multiple from 13x to 15x for ACC and 16x to 18x for Ambuja.

The brokerage upgraded Ambuja to a buy rating with a target price of Rs. About 35 percent.