Investec Launches 'Buy' Recommendation for Ambuja Cements with Price Target Set at Rs 950
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Mumbai, Dec 18 (NationPress) The global banking and wealth management enterprise Investec has officially commenced a ‘BUY’ rating for Ambuja Cements, setting a target price of Rs 950 per share, an increase from Rs 577, reflecting a significant projected return of 65.1%.
In a recent communication, Investec expressed that it “feels confident in the management’s commitment to its growth objectives, cost and synergy targets, along with ongoing initiatives to realize these goals.”
“Considering the growth pipeline, lease expirations (Lease victories reveal the horse to ride on), and the promoter’s economic stake in ACEM (Ambuja Cements), we favor ACEM over ACC. We emphasize consolidation, sustainability, and ESG as pivotal themes for the sector, asserting that ACEM is best positioned to capitalize on these opportunities,” Investec stated.
With an emphasis on consolidation, efficient operations, and substantial production capabilities, Ambuja Cement is solidifying its status as a market frontrunner, paving the way for a robust future for both investors and stakeholders.
The board of Ambuja Cements has sanctioned the merger of its recently acquired companies — Sandhi Industries Ltd. and Penna Cement Industries Ltd. — with itself through distinct schemes of arrangement.
The Adani Group's cement subsidiary will allocate 12 equity shares with a face value of Rs 2 each for every 100 equity shares of Sanghi Industries, which has a face value of Rs 10.
Eligible shareholders of Sanghi Industries will transition to shareholders of Ambuja Cements, as per an exchange filing. Pending necessary approvals, the transaction is anticipated to conclude within 9-12 months.
Ambuja Cements holds a 58.08% stake in Sanghi Industries and has complete ownership of Penna Cement.
Investec noted that this move will “streamline the organizational structure, simplify compliance obligations, and eliminate related party transactions (RPTs).”
Sanghi Industries, which Ambuja acquired in 2023 at an enterprise value of Rs 5,000 crore, boasts a clinker capacity of 6.6 million tonnes per annum, cement capacity of 6.1 MTPA, and limestone reserves amounting to one billion tonnes.
The Sanghipuram facility is recognized as India’s largest single-location cement and clinker unit by capacity, complete with a captive jetty and a captive power plant.
According to Ajay Kapur, CEO of the Adani Group's cement division, the merger is intended to enhance the competitiveness and efficiency of Ambuja Cements, leading to improved working capital management and internal funding to foster business growth.
